Standard Federal deduction/Itemized State Deduction

[biodiver2]

The standard Federal deduction works out better for us and Turbotax correctly uses that.   But I can't figure out how to use the Itemized deduction for the NY state taxes.   I have entered all the desired deductions on the Federal part of the website, but TurboTax chooses a Standard deduction for NY.   

A response to another posting states that 'when you get to the state return, you will be given the option to itemize if your state allows it.'   I don't see that option.  I have gone through all the panels several times.   Please clarify exactly where the option is to itemize the State Deductions for NY.     I'd appreciate any help!

[LeticiaF1]

TurboTax chooses the deduction that is most advantageous for each return and for itemized deductions to help they have to be more than the Standard Deduction.  It could be that your total itemized deductions might not be enough to make a difference on your New York tax return.  

NY 2024 standard deductions

TurboTax transfers data from your federal return to your state return. Before you start fixing your state return, look at your federal return again. Make sure you didn't miss any deductions that could have been included.  After you review your federal return, select the State Taxes tab and review the state section. Pay close attention to the information, especially if you have made changes to your federal return. There might be new sections that need to be completed. 
 

Troubleshooting common federal to state transfer issues

How do I change from the standard deduction to itemized (or vice-versa)?

[biodiver2]

I have double checked the deductions on the Federal portion of the return.   The combined deductions for Property taxes and Charitable contributions are Greater than the Standard deduction for NY State ($16,050).   But TurboTax is still using the $16,050 standard deduction for NY State.  I have gone through all of the pages on the NY state portion several times and I can't figure out how to change that.    I even deleted the NY State part of my return and started over with the same result.      

In your reply you included the following link:  

How do I change from the standard deduction to itemized (or vice-versa)?

That instruction in that link states "When starting your state taxes in TurboTax, we'll ask which deduction you want to take, assuming your state gives you that option."    I don't see where I am given that choice.   Can you please point me to where I find the choice to take the Itemized deduction for NY state?

[KeshaH]

There may be some items you've included that don't qualify as itemized deductions on the state return and therefore you're better off taking the standard. If you'd like, we can look at your return and see exactly what you see to help come to a resolution. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

• Click on Online in the top menu of TurboTax Desktop for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number and state then place in this issue.
• We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states that are included on the return.

[biodiver2]

Thank you!   The token number is 1295242.    New York is the only state that I will be filing in.   Thank you again.   

[KeshaH]

Thank you for sharing your token.

There are two things limiting your itemized deduction in NY and therefore making the Standard Deduction more advantageous for you.

1. Half of your itemized deductions are NY state income taxes, which are not deductible for NY tax purposes.

2. At your income level, your itemized deduction is limited. There's an adjustment on Form 196 (itemized deductions) that's bringing your total deduction below your NY Standard Deduction.

[biodiver2]

I'm not sure that we are looking at the same information, so I'll try to clarify:  

- My token is 1295242
- There are NO state income taxes in our deductions.   The last reply stated that NY State income taxes were 'Half of your itemized deductions'  
- Our deductions are only for PROPERTY TAXES and DONATIONS TO CHARITY.   
- The sum of our property taxes and donations to charity are GREATER than the Standard deduction for NY State ($16,050).
- For Married jointly, the limit on itemized deductions in NY starts to take effect with a Federal adjusted gross income of $396,250.   We are well below that, so I don't believe our deductions for Property Taxes and Donations to Charity are limited.  The last reply stated that 'your itemized deduction is limited.'
- Turbo Tax keeps choosing to use the Standard deduction (Which is lower that what our itemized deduction should be.   

- Maybe I made a mistake somewhere that is making Turbotax believe that the Standard deduction is higher, but I can't find any mistakes.   

- What would REALLY help would be if I could see what TurboTax thinks the Itemized deductions would be (and maybe how it calculated that).     The instructions state 'WHEN STARTING YOUR STATE TAXES IN TURBOTAX, WE'LL ASK WHICH DEDUCTION YOU WANT TO TAKE'     But I can't find that option! 

- Please point me to where I find the option to choose the itemized deduction! (A screenshot of where I find that option would be ideal).   

[KeshaH · Accepted solution]

New York starts with what would be your federal itemized deduction if you itemized. This includes the state income tax that comes from your Forms W-2. The other amounts are indeed your property tax and charitable donations. The total of these two items is just slightly above the NY Standard Deduction for your filing status.

You are correct that the phaseout for itemized deductions on line 40 starts at $396,250 for Married Filing Jointly. 

However, lines 41 through 49 calculate other adjustments to limit your itemized deduction based on various state law. For example, line 41 is where the state income tax included in line 40 would be backed out since it's not deductible under state law.

Line 46 calculates an "itemized deduction adjustment for higher income taxpayers", which starts at $200,000 of income for Married Filing Jointly taxpayers. You would use worksheet 3 based on your income. This is the adjustment that limits your itemized deductions (property tax and charitable contributions) to below the Standard Deduction. 

Please see screenshots below for excerpts from the Form 196 instructions, linked here for your review.

@biodiver2 

[biodiver2]

Thank you for the detailed and very clear explanation!     It makes sense to me now!