Standard versus itemized deduction

[patkeane]

Using TT Home & Business. My itemized deductions are almost $10,000 more than the standard deduction, but the program wants me to use the standard deduction. It shows the same amount of taxes owed in both situations. Not sure how that happens, if the itemized total is almost $10,000 higher. 

[AnnetteB6 · Accepted solution]

That could happen if your taxable income has already been reduced as low as possible (probably to zero) using the standard deduction.  If this is the case, then claiming the higher itemized deductions would only cause you to file a more complicated tax return.  

If the higher itemized deduction and your standard deduction are showing the same balance due on your return, then you are paying a tax other than income tax on your return, such as self-employment tax.  The self-employment tax is calculated based on business income and is not reduced by either the standard deduction or itemized deductions.

Take a look at your Form 1040 to understand this situation.  You will likely see that line 15 is zero for your taxable income.  Line 23 is self-employment tax or other taxes reported on Schedule 2.

[patkeane]

That is a big help! Thank you.

[rsf08]

I have this issue as well, and theorized it could be because the net result for this year's taxes is zero either way, so it's nice to see that validated.

BUT...

There is still a substantial difference in outcome based on which deduction gets used even when this year's result is the same either way.  In my case, it's because of a clean energy tax credit that is limited based on this year's income.  By using the lower standard deduction, more of this credit is being consumed this year, resulting in a lower carryover into next year. 

This is not trivial and, in my not-so-humble opinion, needs to be fixed as a priority!

Unfortunately, I didn't notice this issue until after e-filing my return, so I'm going to have to file an amendment once this is resolved.  Please save a lot of other people the same trouble by fixing this quickly.

[AnnetteB6]

The first step to getting a situation in TurboTax to be reviewed and investigated by the development team is to provide them with a diagnostic tax data file demonstrating the circumstance.  If you would be willing to provide a diagnostic copy of your return, that would be helpful.  The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  

To provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using in a follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

Note:  Since you stated you already filed your return, you may need to get back into the file by using the 'Add a State' option.  This does not actually add a state, but allows the file to reopen.

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

If you are using a Mac version of TurboTax, use these steps:

• Go to the Menu at the top of the screen and select Help.
• Then, Send Tax File to Agent.
• Post the token number here.

@rsf08 

[rsf08]

Thank you @AnnetteB6.

Token number for the file is 313101611-86514144.