Why couldn't I itemize in 2020?

[AuntLJ]

Married filing jointly, AGI 321,000, Taxable Income 295,102

Turbotax had me file with the standard deduction in 2020.  I contributed charity (about 15k) that year, and had property taxes (about 20k) , as well as some other deductions, so it would have been nice to itemize.  Now I am planning for next year and am trying to understand so that I can plan better.  Why can't I itemize please?

[Mike9241]

if the following doesn't completely answer your question, contact support. we can't see your return.  all types of taxes on schedule A are limited to $10,000. with $15K in charity, you come close to the standard deduction when both taxpayers are under 65 of $24,800. if both are over 65 the standard deduction is $27,400. if just 1 is over 65 then $26,100

[TaxTim1]

To add to @Mike9241's reply, the link below is to a Turbotax article that I hope you will find useful in answering your question.  Hope this helps.

https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/tax-deduction-wisdom-should-you-item...

[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 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)

2021 STANDARD DEDUCTION AMOUNTS

SINGLE $12,550  (65 or older + $1700)

MARRIED FILING SEPARATELY $12,550  (65 or older + $1350)

MARRIED FILING JOINTLY $25,100  (65 or older + $1350 per spouse)

HEAD OF HOUSEHOLD  $18,800  (65 or older +$1700)

Legally Blind + $1350

[Texas Roger]

In addition to the standard deduction amounts, you may have also received a $300 deduction added to your standard deduction for your charitable contributions which would have further increased your deductions using the standard deduction rather than itemized deductions. 

[AmeliesUncle]

Does your 2020 tax return have a number on Line 1 of Schedule 2 (and also has Form 6251 as part of the tax return)?

[AuntLJ]

Having researched this further, I think the answer to my own question is that I probably exceeded a threshold of $313,000 income, that caused me not to be able to itemize.  I withdrew very little from my IRA, but had I not done that, I probably would have been able to used more of my itemized deductions, and lowered my tax bill significantly.  I might be wrong, but this is my best hypothesis.  I would have been better off if I had kept my income just a little lower.  That also pushed me over a medicare  premium threshold.

[AmeliesUncle]

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@AuntLJ wrote:

Having researched this further, I think the answer to my own question is that I probably exceeded a threshold of $313,000 income, that caused me not to be able to itemize. 

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No, that limit did not exist in 2020 (and even when that limitation was in effect, the limit SLOWLY reduced your deductions once your income passed that certain threshold).

You did not answer my question above, which is what I suspect is the reason.

[AuntLJ]

Schedule 2 does not have an entry on line 1 in my turbotax return, but has an entry of 3002 on line 8.

[Mike9241]

schedule 2 has nothing to do with itemized deductions.  line 1 of schedule 2 is for Alternative Minimum Tax (AMT). you are not subject to it if line 1 is blank. this tax is computed on form 6251 with the tax from line 11 of the form

line 8 is for taxes from form:

8959 additional medicare tax

8960 additional investment income tax

8889 additional tax od HSA's

8853 additional tax on Archer MSA 

and a slew of other taxes.

we can't see your return or schedule A, but to itemize in 2020 your allowable itemized deductions had to exceed filing single $12,400 or if over $65 $13,700.

medical expenses are limited to the amount in excess of 7.5% of your AGI

taxes are limited to $10,000

contributions can be limited based on AGI and the type of charity

mortgage interest can be limited if the acquisition debt exceeded the applicable threshold.

2% itemized deductions are eliminated 

theft and casualty losses may or may not be deductible

gambling losses are limited to gambling winnings.

[AmeliesUncle]

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@Mike9241 wrote:

schedule 2 has nothing to do with itemized deductions. 

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It most certainly can due to AMT (although in this case, the OP said there is no AMT, so my guess was wrong).  Some itemized deductions are 'add backs' for AMT, so if AMT applies the 'add-backs' can effectively cancel out the itemized deductions, and TurboTax will show the Standard Deduction instead of Itemized deductions.