Mistake in TurboTax? NJ Forms

[palffy16]

I am a NJ renter with high enough income and rent paid that the NJ Property Tax Credit, as 18% of my total rent paid in 2020, should default to the deduction option as in prior year. However, TurboTax keeps choosing a max credit of $50 instead. Can someone confirm this is not a mistake in TurboTax?

[Cynthiad66]

Yes, the maximum credit is $50. I think this may just be a question of where and how the credit is reported on the NJ-1040 tax form.

When you are a renter, 18% of your gross rent paid is considered as property tax paid. This amount shows on line 38a of the NJ-1040 form. The amount of your allowed credit is on line 55, which should be no more than $50.   NJ Property Tax Credit Maximum

[palffy16]

According to NJ Division of Taxation - When to File and Pay (state.nj.us), one can take either the $50 credit or the deduction, whichever is higher. 2020 TurboTax seems to be taking the $50 credit automatically for me, but I am fairly certain I would save more with a deduction...

[BillM223]

I just ran a test, and TurboTax chose the deduction for me.

Tell me why you think that you should get the deduction (i.e., help me build a test case), and let's see if we can figure this out.

[palffy16]

Nevermind, I think it is calculating correctly. Thank you for following up, both of you.

I looked through the NJ calculation worksheets manually, and my situation is a bit different vs 2019, based on how much of income is allocated to NJ.

[SweetieJean]

Just be aware that it can switch back and forth between a deduction and a credit from year to year.  This is partially because of changes in your own tax situation. However, that $50 credit has remained at a flat $50 for many years, but the NJ tax brackets keep changing and thus affect the deduction option.