TurboTax Desktop 2025 appears to incorrectly calculate the state tax addback for South Carolina

[k2michelin]

I believe there is a calculation error for South Carolina in the desktop version.

If you itemize deductions, South Carolina requires adding back in the federal deduction for state income taxes (effectively, you can't deduct your SC income tax from your SC income).

SC1040 has a specific line for this, line 1(a).

There are a few other lines for specific addbacks (out of state losses on rental property, etc) and then there is a line E which is a catchall for other miscellaneous additions (for example, the QBI deduction).

TurboTax is putting the SC state income tax addback into line 1(a) - as it should - but then also putting this state income tax addback into line 1(e) along with the QBI and any other misc addbacks. Effectively, TT Desktop adds the income tax back in two places, thereby overestimating your SC taxable income and so your SC tax due.

Within the program front end, it appears to handle the calculation correctly:

Going into the detail screen, you see the tax addback and the QBI

But when it comes time to generate the SC1040, it puts the entire amount (tax + QBI) in line 1(e) and duplicates the tax addback on line 1(a) where it actually belongs. Incidentally, the $1976 value appears to be the correct value, as this is also reflected on worksheet A where the exact addback value is calculated. The $1978 in the detail above appears to be a minor error. However, it cannot be edited in the screen above.

Anyway, if I'm correct and this is a bug within TurboTax, it needs to be corrected. I'm going to redo my state return from scratch and see if maybe it was user error or if there's a way to trick it so it doesn't double-count the tax addback.

Thanks, 

k2michelin

[RogerD1]

I did a mock return for South Carolina and found that the state tax addback was correct and that it did not create a line in the Other additions section.  Possibly your strategy of starting over with your South Carolina return will work to get you to this point as well.

There are multiple items that can be added back and entered on line 1e. of the SC 1040.  You can find the Instructions for SC 1040.  Scroll down to Individual Income Tax packet for 2025 and open the PDF for instructions.  The addback items start on page 24 of the instructions.

[k2michelin]

Thanks @RogerD1  for the quick response.

Agreed, there are many categories of miscellaneous state tax addbacks that belong in line 1(e). Items such as bonus depreciation, QBI (which is applicable in my return), and so on.

Curious: Did you prepare the mock return using the desktop version of TurboTax Home & Business?

Here's what I tried for diagnostics:

I thought that maybe the presence of the QBI (which in itself triggers the program to activate line 1(e) for the misc addbacks) might be tripping it up, so I changed the federal return saying that the business did not qualify for QBI. That way, the program should just put the tax addback onto line 1(a) and line 1(e) should be totally blank.

Not successful. Very similar issue, here's the screenshots:

Here's the pdf of SC1040 showing the $1976 in 1(a) and $1978 in 1(e)

Here's the detail sheet showing how the $1976 value is calculated (this is part of the printed worksheets from the SC returns). I believe this to be correctly calculated.

Here's the main screen showing the "items that SC treats differently" - you can see that it has $1978 as "other additions" which is the code for line 1(e):

And then, if you click edit on that screen to see where the $1978 is coming from, you get this (which cannot be deleted):

As an aside, the $1976 that goes into line 1(a) (which I believe is correctly calculated via the worksheet and correctly placed on 1(a)) is neither accessible nor visible anywhere is the desktop front end. And the $1978 is only visible when pressing the edit key on the Other Additions screen.

Any other thoughts? I might try editing / overriding the forms directly. If that doesn't work I guess I'll have to manually print forms and file by mail.

Thanks and best regards

k2michelin

[RogerD1]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Desktop/Download Versions:

1. Open your return.

2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent”*

3. This will generate a message that a diagnostic copy will be created. Click on OK and the tax file will be sanitized and transmitted to us.

4. Please provide the Token Number that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, Send Tax File to Agent”)

[k2michelin]

Thanks Roger -- OK, I have submitted the sanitized version of the return. The token number is

120955177-59063901

I might have found another clue. I regenerated the state return and this time I printed ALL the various forms and worksheets, not just the default.

The $1976 comes from "SC Worksheet A" for State Tax Addback (it's what I had included in earlier posts).

But then, the $1978 is coming from "Smart Worksheets" which is characterized as addback from the OBBB (which SC did not adopt all the provisions). I believe I have seen other posts expressing confusion about this addback, often in the amount of $750 for single filers (std deduction $15000 --> $15750) or $1500 (std deduction $30000 --> $31500). I believe for my case, this is probably still double-counting the tax addback (i.e. including the same addback obligation via two different avenues) but I will dig into these aspects a little bit more.

Thanks again for all the help

k2michelin

[k2michelin]

I actually did find another thread on this topic, which was addressed by @SusanY1 

I don't know why I didn't find this on my earlier topic searches... 

Anyway, here's the thread for reference. I'll be digesting this and running some what-if scenarios...

https://ttlc.intuit.com/community/taxes/discussion/re-sc-state-addback-tax-calculation-2025-error/01...

[RogerD1 · Accepted solution]

I looked at the diagnostic file that you generated and discovered where the two amounts in question are coming from.

The state tax addback amount of $1976 that appears on line a of SC1040 comes from the State Tax Add worksheet in the South Carolina Individual section when you're in Forms mode in TurboTax Desktop.  This is the amount by which your itemized deductions on your Federal return exceed your standard deduction.

The line 2e amount of $1978 for the State and local tax adjustment is because of South Carolina's non-conformity to the provisions of the One Big Beautiful Bill for state and local tax deductions.  On your schedule A, your state and local tax deduction total is $13,954.  Your SC return already added back $1976 from the amount that exceeded your standard deduction, so that leaves $11,978 (13954-1976).  Since the limit for SC state and local tax deduction goes by the prior rules, the maximum state and local tax deduction is $10,000.  This means that $1978 ($11,978-$10,000) is entered back due to SC non-conformance to the One Big Beautiful Bill - this is the amount on line 3 of the OBBB Smart Worksheet for line 2e.  Because of this, the numbers you are seeing are correct.

[k2michelin]

Excellent explanation @RogerD1  !

I really appreciate your willingness to dig into my specific case to help figure out what was going on.

For sure the fact that the numbers ended up being so close ($1976 vs $1978) and the fact that the labeling is so similar (both being addbacks for tax deductions permitted at the federal level but not at the state level, but computed differently against different ceilings) only added to my confusion. 

It seems my state has managed to thoroughly confuse me (and some others as well, judging by the posts).

Thanks again for all the efforts and best regards

k2michelin