State & Local Taxes Greater than 10,000

[tpatak7]

What does it mean in the summary of Deductions where the line states: State & Local Taxes Greater than 10,000 and the amount is a negative amount making the total deduction smaller?

[Cynthiad66]

The TCJA limits the state and local tax deduction to $10,000 ($5,000 if married filing separately). This deduction limitation is applied to the combined state/local income taxes or general sales taxes, real estate taxes, and personal property taxes. The limitation does not apply to foreign income taxes and other taxes.

How Tax Reform Affects the State and Local Tax Deduction

[jayce_7]

But why would this ever display negative?  And would this affect my return?  There is no entry that is negative for this in my input data.  In some places, it seems this is an old issue from past TT versions when importing a prior return but I wouldn't expect this to be in your latest 2022 product after being aware of the issue a year or two ago.

[KrisD15]

It isn't an "Old" issue, it is deliberate. 

If you have a negative number, such as you do - 3,390

you know that 3,390 of state tax that you paid was not allowed to be included in your Itemized Deductions because of the Sate And Local Tax (SALT) limit. 

You can use that amount as a reference if you get a state refund. 

When determining if a state refund is taxable NEXT year, you can compare the refund amount to the 3,390. If the state refund is 3,390 or less, it will not be taxable income since it would not have affected the 10,000 you were allowed to claim. 

[Simpleton]

I am still confused. Based on your answer it seems like it would make sense IF $13,390 was displayed in the "State and Local Income or Sales Taxes" line item two rows higher in the summary. Then $13,390 - $3,390 would net out to the $10,000 contributing to deductions if itemized, right? 

However on my return, the negative number in the "State and local taxes greater than $10,000" line item is much more than the "State and Local Income or Sales Taxes" line item $10,000. What am I missing?

Thanks!

[BillM223]

OK, you have me confused.

Are you on the federal Schedule A? what is the line number of the line for ""State and local taxes greater than $10,000"" because I don't see it on Schedule A. I see similar wording but not so exact that I can be sure of which line you are speaking of. Help me out here.

[beej007]

I have the same issue. I only have $5220 for my State and Local Taxes TOTAL. But I have a negative $5983 for State and Local Taxes over $10,000 which greatly impacts my total deductions. I paid $8000 in State and Local taxes last year and had a $0 in the over $10,000 field for 2023. What has changed? This makes no sense.

[beej007]

Looking at Form A, I now see the issue. The TurboTax step-by-step is not clear in the year-to-year comparison (it did not include the deducation for 2023) and it includes the property tax, etc. Needs to be clearer.

[KrisD15]

Are you seeing this on the "Here Are Your 2024 Deductions & Credits" screen?

All state tax, including state tax withheld on income such as a W-2 and 1099-R plus any property tax you reported, cannot add up to more than 10,000.

This screen shows if it was more than 10,000.

On Schedule A it will be limited to 10,000.

As you see, line 5d is 17,000 which is 7,000 more than line 5e. 

@beej007 

[KrisD15]

There is more than just "State and Local Income or Sales Tax" involved, it also includes property tax and possibly vehicle registration. These are all state taxes. 

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