California property tax deduction Form 541

[rps7]

Hi,

I am trying to confirm if I am able to deduct the full amount of property taxes paid in 2020 on CA Form 541?  On the federal 1041 I am limited to $10000 but I am reading conflicting information if I can deduct all of it on the Form 541?  The property taxes are $25,000 and it did not automatically fill in on the 541 form.

Thanks!!

[ThomasM125]

As per the instructions to CA form 540, California does not conform to the federal tax laws with regard to the limit on state tax deductions. The instructions to form 541 do not list any modification to that for trust tax returns, so it seems you are correct in assuming you are not limited to the $10,000 amount.

You can read more about that here:

https://www.ftb.ca.gov/forms/2020/2020-540-ca-instructions.html

[rps7]

Thanks so much for the response.

I did read the CA instructions, but was hoping to get clarification from someone that has completed the CA 540 or 541 that has had this same issue.  If the whole $25000 of property tax is allowed what line on the 541 do you enter the amount?

[JeffreyR77 · Accepted solution]

As @ThomasM125 stated, California does not conform to the Federal law limiting the deduction for property taxes to $10,000.

On the California CA 541, include the full amount of property taxes paid on Line 11. 

On the CA 540, enter the difference between the deduction claimed on your Federal Schedule A and the total amount paid in property tax for the year in Part II, Line 5e, col C. 

CA 541 Instructions Fiduciary Tax Return (see Line 11 Taxes)

CA 540 Individual Tax Return Instructions (see Part II Adjustments to Federal Itemized Deductions Li...