Is Itemized return for Feder limited to $10,000?

[Miguomao]

Is the $10,000 limit for itemized deduction true?? 

I received a message from Turbo that I "have reached max limitation of $10,000 for Federal return, any more entering won't affect my Federal return."   Yet I have not even entered my medical expense - that is over $10,000.  

We do not have state tax.  So if the $10,000 limit is true, then my only choice is to go Standard?

[DoninGA · Accepted solution]

The $10,000 limit is only for itemizing state income taxes or sales taxes and real estate taxes and personal property taxes.

You medical expenses are not part of that $10,000 limit.

Health care insurance premiums and other medical expenses that you paid with out of pocket funds are an eligible medical expense that you can deduct using Schedule A for itemized deductions. However, only your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted. Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

[xmasbaby0]

Itemized deductions are not capped at $10,000.  The $10,000 cap is on state and local taxes.   You can also enter mortgage interest, loan origination points, charity donations, medical expenses, etc.   If your itemized deductions exceed your standard deduction then the software will use your itemized deductions.  

STANDARD DEDUCTION

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 2022 Form 1040.

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

[PattiF]

The $10,000 limit only applies to the total of state and local sales, income, and property taxes. If there is no state tax, the total of your property taxes is capped at $10,000.

You can still enter medical and charitable deductions for Schedule A, Itemized deductions.

[fanfare]

the notification is not worded correctly and should be rephrased.

TurboTax doesn't seem to care.

@Miguomao 

[Miguomao]

Thanks so much!!  So the message Turbo sent me was totally wrong !!!!!

Thanks again for the clarification!

[Miguomao]

Thanks so much!!  So the message Turbo sent me was totally wrong !!!!!

Thanks again for the clarification!

YH

[Miguomao]

Thanks so much!!  So the message Turbo sent me was totally wrong !!!!!

Thanks again for the help!

[Miguomao]

Thanks so much!!  So the message Turbo sent me was totally wrong !!!!!

Thanks again for the clarification!

[Miguomao]

Thanks so much!!  So the message Turbo sent me was totally wrong !!!!!

[Miguomao]

Yes their message was totally misleading!

Thanks so much!!