Turbotax deducting SALT on itemized STATE return

[bwracerg]

I elected to itemize deductions on my federal return and deducted my state tax paid in light of the increased SALT cap. In my state, you must itemize your state return if you itemize federal. Turbotax has deducted the full SALT amount on my itemized STATE return. Can this be fixed?

[VolvoGirl]

That’s right.   You can’t deduct state tax payments on a state return.   You get them as withholding or estimates paid in other areas of the return.   

[bwracerg]

Yes, so how do I stop TurboTax from deducting my state tax payment on my state return? That's what it's doing.

[VolvoGirl]

Where?  State tax payments are suppose to be subtracted from the federal itemized deductions.  You don't get to  include them on your State Itemized Deductions.  State itemized deductions START with the total federal deductions then need to subtract taxes and other items that aren't  allowed on state.   

What state payments did you enter?  Like State Withholding and State Estimated payments .   What state are you in?  In California you can deduct property tax (real estate & car reg)  on the state return.  

State Withholding and Estimated payments automatically go to the right place as payments/credits on the state return when you enter them on the federal side.  

[bwracerg]

State is GA. The only thing I have done is enter my W2. On the federal section, under deductions, when I was asked about potential deductions I clicked "state taxes paid". I don't have estimated payments, sales tax, or property taxes. Turbotax automatically took the amount of state withholding paid recorded on my W2 and included that as an itemized deduction. Looking at the state summary, the exact same amount is listed under deductions and exemptions. It's obviously incorrect.

Under "Total prepayments and credits" on the state tax summary, it lists that same amount plus $300, which comes from the $300 credit GA introduced for itemizing deductions.

[VolvoGirl]

Maybe Don can help  @DoninGA 

[DoninGA]

@bwracerg If you are not itemizing your deductions using Schedule A on your federal tax return, then the Georgia return will only be using the Standard Deduction of $12,000 if you are Single, Married Filing Separately or Head of Household.  It will be $24,000 if you are filing as Married Filing Jointly.

[bwracerg]

I did itemize deductions on my federal return using Schedule A. I itemized my state taxes paid. The amount of state taxes paid was subsequently also itemized on my state return automatically by Turbotax. It is not the standard deduction and the itemizer credit was also applied. It seems like this is a software error. I ran my info through another tax software and that did not happen, so I guess I will just file elsewhere.

[DoninGA]

@bwracerg So the total of all your itemized deductions was greater than the Standard Deduction for your filing status?  That would be surprising since less than 10% of taxpayers are eligible for itemized deductions.

Standard deductions for 2025

Single - $15.750 add $2,000 if age 65 or older
Married Filing Separately - $15,750 add $1,600 if age 65 or older
Married Filing Jointly - $31,500 add $1,600 for each spouse age 65 or older
Head of Household - $23,625 add $2,000 if age 65 or older

[bwracerg]

Yes, my state tax in itself exceeded the standard deduction and was able to be fully itemized due to the increased SALT cap for the tax year, which Turbotax correctly identified. Honestly the excess over the standard deduction was not huge and seems to have an overall net negative affect since I'm required to itemize the state return as well and cannot deduct it there. But TT's software does not function properly in this instance.

[DoninGA]

@bwracerg Sorry, I am not following you.  Assuming you are Single, Are you saying that the state taxes you paid were greater than $15,750?   And that is the amount that was entered on Schedule A Line 5a?

The SALT portion of Schedule A is limited to $40,000 in total if you are Single or MFJ.

I have the Georgia Form 500 state tax return that is in the Premier desktop edition for tax year 2025 and am not seeing what you are describing. 

[bwracerg]

Yes, my state taxes paid are greater than $15,750. That amount is entered on Schedule A. That same amount is deducted from my state return, presumably pulled from Schedule A. I am using TT Online 2025.

[DaveF1006]

Reading through this entire thread is confusing. What are you trying achieve? If I read this correctly, first, you wanted your full deduction of the taxes.  You found out this couldn't be done.

Now, you say it is fully itemized on your state return but the impact isn't huge.  What is the outcome you are looking for, because your answers have thrown us all into a state of confusion?

Please clarify your intent so we can better serve you.

@bwracerg 

[bwracerg]

I'm genuinely not sure what the confusion is. I have not contradicted myself at any turn and don't know how to make explanation any clearer. I never said or determined the deduction could not be done, I said the program did not handle the deduction correctly, which is still the case.

To recap the situation again: my state tax withholding is >$15,750. TT appropriately recommended I take this as an itemized deduction on my FEDERAL return in light of the SALT cap being raised. I have no other amounts from other sources to itemize, my SALT represents the full amount of my itemized deduction. TT erroneously deducted this full amount as an itemized deduction on my STATE return as well, but state taxes paid obviously cannot be deducted from a state return. I posted because wanted to alert that this is a possibility using this service and I didn't know how to fix it. On my own, having received no meaningful engagement here, I determined that itemizing only SALT on my federal return, if properly handled, would result in an itemized deduction of $0 on my state return (must itemize state if federal is itemized), ultimately negating the extra federal refund I would receive by itemizing in the first place. Therefore, it made more sense to just take the standard deduction instead of spending more time on this. But I still thought it was worthwhile to alert about the error in case others experienced it.

So initially my aim was to get the problem fixed, and then I realized I'm my situation it wasn't worth it and said as much. I don't know how to explain it any better, but it's a moot point. 

[RogerD1 · Accepted solution]

In checking the instructions for Georgia for filling out their tax return (link to GA DOR instructions for 2025 IT-511), Georgia does allow the inclusion of taxes withheld by Georgia as an itemized deduction.

Line 12a on Georgia Form 500 is the itemized deductions from Federal

Line 12b is an adjustment for income taxes other than Georgia plus interest expense for the production of income exempt from Georgia tax.  If the only state tax was withholdings from income earned in Georgia, then this line would be zero.

Line 12c is the Georgia itemized deductions, which is line 12a less line 12b.  Since 12b is zero, then line 12c would be the same as the Federal itemized deductions.