Using the download version and married filing jointly. Salaried employee; wife gets SSI. AGI around $200K, mortgage Interest/property taxes about $45K. But TurboTax is giving me the standard deduction of $26.1K (wife is over 65, I'm not). What gives?
Are you making the common mistake of just adding up all the amounts for your itemized deductions without considering the caps and thresholds that must be met?
Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts) The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
Your standard deduction lowers your taxable income. It is not a refund. You will see your standard or itemized deduction amount on line 12 of your 2020 Form 1040.
2020 Standard Deduction Amounts
Single $12,400 (+ $1650 65 or older)
Married Filing Separate $12,400 (+ $1300 if 65 or older)
Married Filing Jointly $24,800 (+ $1300 for each spouse 65 or older)
Head of Household $18,650 (+ $1650 for 65 or older)
Mortgage interest and property taxes are handled separately.
1) .... Property taxes + State income taxes total/together, are subject to a 10,000 maximum.
2) ...Mortgage interest may be somewhat limited if Mortgage exceeds 750,000...depending on when the mortgage started...( and if you refi-ed the mortgage during 2020, there is a software bug that may be limiting the mortgage interst.....that bug is still being worked on)
Thanks for the info! I did refinance this year and while TurboTax seems to have captured all the mortgage interest, it sounds like I need to wait for an update to correct that bug in order to be sure. Is there a way to monitor when that update is released? That way I'll know if nothing changes, that the bug was fixed but I'm somehow limited in some other way.
Thanks again for the heads-up on the bug!