TT taking Standard deduction even through itemized deductions are greater

[MaddyPi]

Hi all, I have seen this question being asked a few different ways but I am not convinced by the answers thus far. My itemized deductions are generally higher than std deduction; I took itemized last year and the prior years as well. However, this year whatever I do I am still getting only the std deduction. I understand the 2017 Tax act, etc. However, this should have applied even last year - why only this year? Another change that has of course happened is my AGI has increased compared to last year. Could this be the reason that I am hitting some limit I am unaware of that prevents me from itemizing my deductions? I feel there is more to this than meets the eye, and I am hoping Turbo Tax is doing the right calculations behind the scenes. What are other factors that decide if the standard deduction applies even though my itemized deductions are higher?

[xmasbaby0]

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. (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

And for next time:

2023 STANDARD DEDUCTION AMOUNTS

SINGLE $13,850  (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $12,850  (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $27,700  (65+/legally blind) )  + $1500 per spouse

HEAD OF HOUSEHOLD  $20,800 (65 or older/blind)  + $1850)

[NCperson]

@MaddyPi - since you AGI is greater, that can impact the medical costs that can be itemixzed.

1) Medical - the medical that exceed 7,5% of your AGI can be itemized

2) SALT - *stand and local taxes" - $10,000

3) contributions - there are limits, but the are very high percentages of your AGI.  

4) mortgage interest - there are limits if the mortgage balance exceeds $750,000

[MaddyPi]

Thank you. I am aware that the itemized deductions do not count 'dollar for dollar'. I am not claiming medical expenses, so the only two items that may have had an impact are the cap on SALT and the mortgage limit of $750k. But I thought these limits were also in effect last year; hence my question. And last year, TT did itemize my deductions (even the year before that). My itemized deductions have not changed significantly from last year. Since TT gives a comparison between last year's and this year's numbers, it's a good way to confirm any change.

[MaddyPi]

Thank you. 2) and 4) are likely impacting my ability to take itemized deductions. Hasn't this been in effect even last year?

[NCperson]

@MaddyPi is it possible your itemized deductions were slightly better than the standard deduction in 2021 but in 2022 the standard deduction was increased and now your itemized deductions are slightly below the standard deduction? 

[Critter-3]

If it's giving you the Standard Deduction and  not showing you Schedule A you can check the actual amount of itemized deductions by using by going to

Tax Tools on left

Tools - Topic Search (top left box)

Type in  itemized deductions, choosing.  It should highlight that in the list, click on GO

Then Click on "Change my deduction". That will display the actual amount of itemized deductions vs. the standard deduction.    (Be sure to uncheck "Change my deduction" after checking it so you do not lock in the wrong deduction.

How to change between the Standard Deduction and Itemized Deductions

https://ttlc.intuit.com/community/accessing/help/how-do-i-change-from-the-standard-deduction-to-item...

[xmasbaby0]

And....did you happen to turn 65 in 2022?  If so, you have a higher standard deduction, making it even harder to itemize.

[AmeliesUncle]

Does your tax return have a Form 6251 (and therefore an amount on line 1 of Schedule 2)?

Alternative Minimum Tax (AMT) can sometimes be the cause.  Effectively, AMT can sometimes cause some of the Itemized deductions to be reversed and added to the AMT tax.  If TurboTax sees that, it may choose the Standard Deduction because it knows that AMT will reverse some of the Itemized deductions.