Turbotax is recommending to take my itemized deductions, but its less than the standard deduction?!?!

[xanman2112]

I just finished my federal taxes for 2019 on turbotax.  I have filed "Married filing jointly".  What's very strange is that my itemized deductions are about $20,000, and its telling me I would owe less taking the itemized deduction over the standard deduction ($24,400).  This does not make sense to me?!?!   Even if I "force" the standard deduction ($24,400), it still shows that I will owe more... even thought the summary total deduction line is higher.  Any ideas?

[DaveF1006]

this doesn't make any sense to me either.  There may be a unique circumstance that neither of us can determine.  I would suggest reaching out to customer service as they have the ability to look at your return to pinpoint the issue you are having.  i wouldn't be be able to speculate without looking at your return.

[xanman2112]

Thanks Dave!  How do I contact customer service?

[AnnetteB6]

Take a look at the following TurboTax article for information about how to contact us by phone:   What is the TurboTax phone number?

[whitney2020]

I'm having the same issue. It is really unclear to me how this would be possible. My itemized deductions are even less than that 17,000 compared to the Married Filing Jointly 24000. Did you get an answer??

[CatinaT1]

Please call Turbo Tax Customer service.  Here is a link:  Turbo Tax Customer Service

[whitney2020]

And if I call then I have to add "Plus" service to my bill. I shouldn't have to pay for another service because your program isn't showing why this math works. Turbotax clearly states that I should take the higher deduction. Then it tells me my itemized deduction is lower than the standard deduction. Seems like a built-in contradiction in order to confuse and subsequently up-charge your customers.

[ThomasM125]

If you call about a problem with the program you do not have to upgrade to Plus.

It may be that you need to itemize to benefit you on your state tax return. Some states require you to itemized on the federal return to allow you to do the same on the state return.

It is possible the the higher standard deduction is not a benefit to you for reasons such as you have already reduced you taxable income to zero by taking the smaller itemized deduction.

I am sure there is a good explanation, but you need someone to look over the tax return to discover what it is.

[whitney2020]

I called about the problem and they recommended that I upgrade to talk to a CPA. 

😆

I could almost feel her eyes roll when I suggested the program might need additional verbage dealing with this.

The benefit is not for my state return: the itemized deduction < standard deduction but my federal return is GREATER with the itemized than the standard. There is no explanation of this math. 

I have not reduced my taxable income to 0. 

There is absolutely no reason I should have to upgrade to get an answer to this question. The program clearly states, as well as your blog, etc. that it is better to take the higher deduction because it will reduce your taxable income more (duh). But then the program makes a recommendation that I do the opposite of what it recommends. In every other situation I've encountered on there, the program gives a reason that makes sense for it's directions. Not here-contradiction. 

[VictoriaD75]

You may want to review your tax summary to see what is happening on your return. This view allows you to see what is happening on the return and review the calculations. You can make changes and then view again.

From the menu on the left, click on Tax Tools. Click Tools. Choose View Tax Summary. Again on the left, click on Preview my 1040. 

Adjusted gross income appears on line 8b, and the itemized/standard deduction appears on line 9. From there, review what the change is to your taxable income on line 11b and any credits listed below. 

[Zebhead47]

I had the very same problem, itemized worth about $18,000 and standard worth $27,000. Neither first level support or CPA level we’re able to provide a cogent answer. Initially Turbo tax said a Standard and then today it said my return would be $2,000 greater using itemized. Makes zero sense and Turbo Tax experts have no clue. There should be a straightforward answer why Turbo Tax thinks a smaller deduction is better than a bigger one. 

[JamesG1]

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.

See also here. 

[Anonymous]

I had a similar situation: 12k in itemized deductions vs 24,400 the standard way.

I figured it out by completing the return, not filing, printing out both returns, and comparing the PDFs side by side.

In my case, the issue came down to differences in AMT calculations. While itemizing, only the state and local portion is added back to AMT income, while if i took the standard deduction, all of that is added back. Itemizing made my AMT income and tax lower.

This alone wasn't enough. The other issue is that I have a credit for prior year AMT I'm carrying forward. By lowering my AMT income, TurboTax was able to claim more of of my prior year carry forward as a credit in the current year.

In my case this turned out not to be a good deal: burning $5k in carried forward credit to get an extra $750 in refund is an 85% percent penalty to get my money a year early, which is just awful.

In short: in my case TurboTax is being incredibly short sighted, optimizing only for the current year return number, but would have cost me money in the long run.

I went with the standard deduction.

[whitney2020]

Thank you for taking the time to respond! Obviously Turbotax is not prepared to deal with this. I spent a lot of time talking to people at Turbotax who had no idea what to look for and just blamed me for inputting the wrong numbers. Done using Turbotax!

Looking back at the return, I have the same situation with AMT credit as you. Wish I had known before I filed! This is an interesting problem/complication from the dumb AMT laws that shouldn't have touched us to begin with. For those who don't know, AMT was supposed to fix a problem: some people making more than $200,000 had avoided paying any tax at all. A couple hundred people had avoided paying tax, but the AMT ended up affecting 5 million people. 

[xanman2112]

Whitney,  sorry I am just seeing this reply 5 months later as I decided to revisit my tax return.  I don't know what you are saying ... did TurboTax screw up?  Should I have taken the standard deduction (which is higher) and owed the IRS less?