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Level 1

State and local taxes greater than $10,000

Question on SALT deduction. I know that the law changed in 2019 and it now maxes at 10,000. But looking at the screen our State and local income or sales taxes are $11,755 but then it's deducting from my deductions (-$8,591). Shouldn't it just be duducting the overage of $1,755.

 

Screen Shot 2020-03-08 at 1.13.43 PM.png

 

Thanks in advance for the help!

1 Best answer

Accepted Solutions
Highlighted
Level 15

State and local taxes greater than $10,000

SALT includes state and local income tax paid, state sales tax paid, and property taxes paid

 

Look again at your amounts---

 

Real estate taxes                                                                   6708

State and Local  Income or and Sales tax                      11755

Vehicle registration                                                                128

 

Those add to    $18,591   -  10,0000  =  8591

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

View solution in original post

8 Replies
Highlighted
Level 15

State and local taxes greater than $10,000

SALT includes state and local income tax paid, state sales tax paid, and property taxes paid

 

Look again at your amounts---

 

Real estate taxes                                                                   6708

State and Local  Income or and Sales tax                      11755

Vehicle registration                                                                128

 

Those add to    $18,591   -  10,0000  =  8591

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

View solution in original post

Highlighted
Level 1

State and local taxes greater than $10,000

Thanks. Didn't realize property tax was in there too.

Highlighted
Level 2

State and local taxes greater than $10,000

@xmasbaby0, related to your response, can you help me figure out how mine is being calculated? 

 

I can't figure out how they are coming up with $21,154 of SALT deductions and thus subtracting the $11,154. 

 

My math is $13,156 + $7,153 + $498 = $20,807. 

 

Thanks for the help!

 

Picture1.png

 

 

Highlighted
Level 3

State and local taxes greater than $10,000

  The summary screens can be confusing ... sometimes looking at the actual Sch A would be better ...  681 + 11582 +10000 + 153 = 22416 total deductions ( can't forget the QBI on this list even though the QBI is not on the Sch A) this summary list is the total deductions on the return. 

 

498 + 7153 + 13156 =  10000 max 

Highlighted
Level 15

State and local taxes greater than $10,000

@Critter-3 @B0555555 

Thanks Critter for spotting this one.  I missed it.  Looks like Critter set you straight-- you forgot that the SALT limit is $10,000 so you were adding up too much for your state and local taxes + real estate taxes.  You are capped at $10,000 no matter how much you really paid.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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Level 2

State and local taxes greater than $10,000

@CR and @xmasbaby0 thanks for your reply, however, I'm trying to figure out how TT calculated $11,154 they are disallowing.  I don't as I mentioned, 498 + 7153 + 13156 - 11,154 doesn't equal 10,000.

 

Thanks for your help!

Mark

Highlighted
Level 3

State and local taxes greater than $10,000

I suggest you look at the actual forms since the summary screens can be very misleading ... save a PDF of the return with the worksheets for the breakdown of those figures. 

Highlighted
Level 15

State and local taxes greater than $10,000

@B0555555 Seems like you still do not understand what the SALT limit means.  Of course those numbers add up to more than $10,000.  But....the tax law says you cannot deduct more than $10,000 for your state and local taxes and real estate taxes.  You kiss some of the deduction goodbye under the tax laws that went into effect for 2018 and beyond.

 

But....your standard deduction is higher than it used to be, so less of your income is taxed from the get-go.

 

https://ttlc.intuit.com/community/refunds/help/why-did-my-refund-go-down-compared-to-last-year-s/00/...

https://ttlc.intuit.com/community/tax-topics/help/which-federal-tax-deductions-for-2018-have-been-su...

 

 

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?

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.  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. 

 

2019 Standard Deduction Amounts

 

Single $12,200   (+ $1650 65 or older)

Married Filing Separate  $12,200   (+ $1300 if 65 or older)

Married Filing Jointly $24,400   (+ $1300 for each spouse 65 or older)

Head of Household $18,350  (+ $1650 for 65 or older)

 

Look on line 9 of your 2019 Form 1040 to see your itemized/standard deduction amount

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**