Hi. I'm a New Jersey resident filing married filing separately. For the NJ property tax paid entry, do I enter the entire property tax paid or the 1/2 I paid?

[rjs]

If you and your spouse both lived in the home, you enter half of the total property tax.

[JotikaT2]

As rjs posted above, you would only be entitled to half of the deduction or credit if you lived in the same home.

[Cipher00]

Hi, all. Thanks to all who responded.

My apologies for the post, but the limit to the length of the question made the question a bit unclear. I was aware that in my simple situation I could only claim one-half of the property taxes paid. I was unsure about how TT handled the entry.

It turns out that in my simple case (married filing separately, own a single-family home with my spouse, and pay property taxes), I should enter the ENTIRE amount of property taxes paid. TT uses one-half for its calculation, which is correct. If I enter my half of the taxes paid, TT will use one-fourth of the property taxes paid, which is incorrect. I was confused when I found that the property tax deduction on my pro-forma married-filing-jointly return had a different deduction than the sum of the married-filing-separately deductions. My confusion led to my question.

Thanks again to all who took the time to answer.

[superman23]

New to TurboTax and not sure where to ask a question. I will ask it here and hope to get a reply. It's more of an observation.

For married filing separately returns, assuming taxpayer and spouse each claim half the property taxes paid, on the federal input I entered one half the taxes on each return. However, these amounts carry to NJ, and for the property tax credit/deduction, the program takes one half of that amount on each return. This incorrectly results in half the amount being used as a deduction on each taxpayer's NJ return. Therefore, it is necessary to delete the amount on the NJ property tax credit screen (which flowed from the federal return) and enter the TOTAL taxes paid (by both taxpayer and spouse) on the property on each of the taxpayer and spouse's return. I don't think the forms are clear about this. Agree? Thank you.

[ErnieS0]

You can claim on your New Jersey income tax return a property tax credit or deduction for your share of property tax paid @superman23.

TurboTax will carry the full amount you claimed to the NJ return (not half).

Check your entries. Did you check the question "Check this box if you share ownership of a principal residence with anyone other than your spouse?" This box should not be checked.

[Cipher00]

Hi, again. This question was for my 2019 return.

For that time, for NJ MFS, I entered the full amount of property taxes paid for Federal, and TT took 1/2 for the deduction. The appropriate 1/2 paid flowed through to NJ. It’s just that the instructions for TT were unclear.

I’m not yet sure what TT is doing this year, for 2021, since I haven’t seen the worksheets yet. I’ve entered the full amount again for Federal, and the calculation for Federal and NJ appear correct, but the SALT limitation kicks in so it’s unclear to me. I’d be very, very, very careful about overriding a TT calculation though. I found my answer 2 years ago by trying it both ways and checking.

Good luck.

[superman23]

Let me do this with numbers. Taxpayer and spouse pay $12,000 of property taxes on their NJ principal residence. They file "married filing separately". On taxpayer's federal return we enter $6,000 for real property taxes. On spouse's federal return we enter $6,000 for real property taxes. On taxpayer's NJ return, the amount of $6,000 flowed from the federal input to the screen for NJ property tax deduction/credit. Same for the spouse's NJ return. We did not check the box that ownership is shared with someone other than your spouse. On the NJ return, taxpayer's deduction for real property taxes is $3,000. Same for the spouse. The related worksheet for each taxpayer and spouse shows the $6,000 and multiplies that by 50% resulting in a deduction of $3000 ( they may end up with the credit, but what if not?). Therefore, on both taxpayer and spouse's NJ returns the property tax deduction is understated by $3000. 

We can correct this by changing the real property taxes on the NJ screen from $6,000 to $12,000 for each taxpayer so they each get a property tax deduction of $6,000. But we shouldn't have to override.

Comments welcome. Thanks.

[Cipher00]

I agree with the original note: TT explanations are unclear, and we should not have to override something as straightforward as property taxes paid. I think long and hard about overriding a TT calculation if for no other reason than it shifts the responsibility about the calculation being correct from TT to me.

So, to summarize:

-I file as a NJ resident MFS

-I entered on Federal, for 2019 and this year 2021 (and 2020), the full amount of my property taxes paid by me and my spouse. The actual calculations for me were "correct" insofar as I hit the SALT limit with my GIT and 1/2 of PP tax, and that was the limit displayed.

- Was the federal right? The tax calculated was so far as the deduction is concerned. Did TT Federal multiply my PP tax paid by 1/2? I can't tell.

-When getting to NJ, the PP tax deduction was halved, as it should be. (There's no ownership of the property with anyone other than my spouse.) So TT halves the property tax paid at the NJ level. Does TT not halve the deduction at the Federal level? Again, unknown. But with no override, the Federal calculates properly and NJ is handled correctly if I enter the full amount property tax paid on the Federal form.

- Is TT unaware that MFS causes some deductions, like property tax, to be split between spouses? Possible, but that seems very unlikely, especially given that in this instance TT halves the amount entered for NJ.

I think people filing MFS keep very detailed individual records. My spouse and I do. We, like others, have very definite and specific reasons for filing MFS. Some expenses and deductions are easy to separate; medical expenses come to mind. Others cannot be, like property taxes since NJ doesn't recognize that payment as anything but joint from the property owners.

The TT instructions here are unclear. Other spots in TT also cause hiccups (e.g., correctly completing Form 1116 has been bizarre for years). But TT Federal does ask for the full amount of PP tax paid, the resultant calculations appear correct even though the mechanics are "shrouded", and TT NJ displays and handles the payment correctly. I'm also unsure where PP tax would elsewhere appear (AMT, maybe?), so I can't see where else it matters since it nowhere else affects me.

Net: I put the full amount of property tax paid in Federal and do not (need to) override NJ. It works for me, and it has for a while now. FWIW

[superman23]

I responded to an email from TurboTax  + Mint Community with an email, but I don't know if that goes anywhere.  Then, I found this trail again so I'll repeat my comments here. If anyone can tell me how to ask a question that gets to the right people, please let me know.

Hi Cipher 00,

You say that on the federal you entered "the full amount of property taxes paid by me and my spouse". For clarification, as an example, if your total taxes were $12,000 and you each paid $6000, wouldn't you enter $6,000 on your federal return and $6,000 on your wife's federal return? Or, would you enter $12,000 on each? I would enter $6,000 on each federal return. But, then, $6,000 automatically appears on taxpayer's NJ property tax screen, and $6,000 appears on spouse's NJ property tax screen. That looks correct! But, the deduction on each NJ return is calculated to be $3,000. That is clearly incorrect, as the deduction should be $6,000 on each NJ return. Do you agree? Am I missing something? 

Thank you.

[Cipher00]

Hi. What we're both experiencing is that TT is unclear on this!

So, to your example: I entered $12,000 on *both* my federal return *and* my spouse's. Seems wrong, I know, but remember we already answered a question about not living apart for the year. The question is about total property taxes, if I recall properly.  TT calculated my federal tax properly given my SALT limitation. Putting in 1/2, or $6,000, also worked, but I again hit MY limit on SALT. And putting in $6,000 got me a wrong answer with NJ.

Flow to NJ was correct when I entered $12k, and there was no need to override TT on the NJ deduction. So TT must be halving the property tax payment somewhere. Just on NJ and not Federal? I don't know, but that seems rather unlikely. Is TT assuming my spouse and I own the house together? It seems so, but all I know is my numbers are correct.

YOUR NUMBERS WILL VARY. MY CASE MAY NOT MIRROR YOURS.

Good luck.