Tax Year 2020 - Why is TurboTax not applying my itemized deductions when they are larger than the standard deduction?

[misaelcabrera1970]

I had the same problem. I'm using the downloaded version of Deluxe. When I left the UI and looked at the actual tax forms, my mortgage interest was not transferring to line 8a of Schedule A.  I think this is a bug but I would like TurboTax to confirm... I spent a long time trying to figure that out.  For the first time in 15 years, I'm doubting whether or not I should try a competitor.  

[RaifH]

In certain circumstances, TurboTax does not seem to be correctly carrying the reported interest to the appropriate form. If you originally purchased your home prior to December 15, 2017 and have since refinanced it and your outstanding mortgage principal exceeds $750,000, this may apply to you. If so, enter Form 1098 for the refinance in this way:

1. In the Federal > Deductions & Credits section of your return, scroll down to Your Home and click Revisit/Start next to Mortgage Interest and Refinancing (Form 1098)
2. Edit your existing 1098. 
3. Answer the questions and enter the information from your Form 1098s. For the Box 3 Mortgage Origination Date, use the original purchase date even if this is a refinance.
4. Answer What kind of property is this loan secured by?
5. Answer Yes or No to  We didn't pay any points.
6. Answer Yes to Let's see if this is the most recent form for this loan.
7. Answer No to Is this the original loan used to buy your property? 
8. Answer Yes to Is this loan a HELOC or a refinance? 
9. Answer No to Did you take cash out? (assuming you did not take cash out when you refinanced in 2020)
10. Once you are back in the Home loan deduction summary screen, click Done.
11. Answer NO to Do either of these apply to this loan? Answer No even if it does apply, by using the mortgage origin date of the original purchase back in step 3, TurboTax will correctly apply the proper mortgage limit on your home acquisition debt. 
12. Enter the outstanding loan balance on January 1, 2022 in the first field. Leave the second field blank.

@misaelcabrera1970

[AKSnobear]

My issue is the same; regardless that the $ return is the same, I WANT to file itemized, not standard. My reason is that this past year I was on workers comp, so my reportable income was lower than normal years. I need to file itemized ($26,414) so I can try to do deduction rollover for qualifying items in next years filing. So why is it trying to force me to accept only Standard ($12,950)?

[DawnC]

Verify that your Schedule A is showing a higher number for itemized deductions, as some deductions have limitations and you don't get to include the full amount.   Follow the instructions in this help article to change your deduction choice.    How do I change from the standard deduction to itemized (or vice-versa)?    @AKSnobear

[AKSnobear]

Schedule A shows the correct totals:

Property Tax $5640+Mortgage Int $13,238+$7536(limited) = $26,414.

Refund = $2176 (via both Itemized & Standard methods) the program interface just won’t let one change to itemized; keeps going back to Standard is Best for You.

I find this morning, when I use the print and mail version, and save the return, it says itemized, shows the itemized items, and shows all the deductions correctly. Then, going back and switching to the e-filing version, it shows items correctly. Guess I’m good to go?

[Vanessa A]

Yes, if everything is showing properly then you are good to file.

Sometimes, if your refund is staying the same whether you are given Itemized or Standard Deduction, it could be that your Standard Deduction took your taxable income to $0 so there are no additional benefits to itemizing your return. 

 You may also not see a difference if you have a non refundable credit like the EV credit that took your tax liability down to $0. Once you have no tax liability additional Itemized Deductions or other nonrefundable credits will not affect your refund.  

[AKSnobear]

Thanks, Vanessa. My chief concern is not so much the refund, but rather the method. My focus was insuring the itemized version was used, so the ability next year to claim any qualified carry over deductions, remained an option. If I file the Standard Deduction method, I understood this to mean it would prohibits that option.

[Vanessa A]

You cannot carryforward mortgage interest or taxes paid. Generally only charitable contributions are able to be carried forward. 

[AKSnobear]

Correct! It’s the nearly $8k I was unable to use, due to the lower wage last year on work comp, so had little to write off against this year. 

[MarilynG1]

Try this: How to Switch from Standard to Itemized Deductions (or vice versa).

@AKSnobear

[JFother978]

I'm having the same issue.   I know I am not over any Caps or limits, and TT keeps flipping my return to Standardized and doesn't even show the Itemized Interest or Taxes.  I can switch the setting back to Itemized, but then it won't calculate based on the entered amounts.  

[JamesG1]

Are you able to view Schedule A Itemized Deductions and compare it with the numbers on the Your tax breaks screen?  This would tell us the difference.

At the Your tax breaks screen you may be seeing a large figure for state and local taxes.  But in generating Schedule A Itemized Deductions the $10,000 limitation is imposed.  This may account for what you are seeing.

TurboTax Deluxe will determine whether to file using the standard deduction or itemizing your deductions based upon your answers to questions.

At the screen Based on what you just told us, the standard deduction is best for you, you can click on the link at the bottom Show me the breakdown of my itemized deductions.

There is also the link Change my deduction.  Please read through these links carefully.

@JFother978

[JamesG1]

Are you able to view Schedule A Itemized Deductions and compare it with the numbers on the Your tax breaks screen?  This would tell us the difference.

At the Your tax breaks screen you may be seeing a large figure for state and local taxes.  But in generating Schedule A Itemized Deductions the $10,000 limitation is imposed.  This may account for what you are seeing.

TurboTax Deluxe will determine whether to file using the standard deduction or itemizing your deductions based upon your answers to questions.

At the screen Based on what you just told us, the standard deduction is best for you, you can click on the link at the bottom Show me the breakdown of my itemized deductions.

There is also the link Change my deduction.  Please read through these links carefully.

@JFother978

[TomInACF]

I'm having this problem on my 2022 return.

In my case, I retired about a year and a half ago, and my medical expenses are far in excess of 7.5 percent of my income. Yet TurboTax wants me to take the standard deduction.

I'm not sure why.

[Vanessa A]

If you are retired, how old are you?  Are you married or single?  If you are over 65 and single your standard deduction would be $14,700.  If you are over 65 and both you and your spouse are over 65, then your standard deduction would be $28,700.  

So, even if your medical expenses are greater than 7.5% of your AGI, they still may not be enough to surpass your standard deduction.  Also, when you are calculating your medical expenses, remember, the first 7.5% does not count towards your itemized deduction.  

So, if you have income of $75,000, only your medical expenses in excess of $5,625 would count towards your Itemized Deductions.  So, if you had $10,000 in expenses, only $4,375 would be counted.  You would then add that $4,375 to your state and local income and property taxes (up to $10,000), your mortgage interest and charitable donations (which can also be limited based on the organization).  If all of that exceeds your standard deduction, then TurboTax should give you the Itemized Deduction instead of the standard deduction.  

You may want to walk back through to check your deduction entries.  You can also look at your Schedule A to see what the total of your deductions are as well as line 12 of your 1040 to see what your Standard Deduction is.  

If for some reason your Schedule A line 17 is showing deductions greater than your line 12 of your 1040, you can go back through and select in TurboTax that you want to use the Itemized Deduction instead of the standard deduction.