$40k SALT deduction not accounted for properly

[dws1nzl]

Hi,

I am having an issue with the new $40k limit for the SALT deduction.  TurboTax is selecting the Standard Deduction for our returen, but our state and local W-2 withholdings are about $29k and the property taxes are around $15k.  This combines to $44k, but we should get the $40k limit, correct?  I have checked our W-2 information and my property tax information that was entered in TurboTax Premier (Windows desktop version).   

Yes, I automatically update the software each time I use the software

How do I resolve this issue?

Regards,

Don

[DavidD66 · Accepted solution]

It may be because your income is too high. The $40,000 SALT deduction begins phasing out when your Modified Adjusted Gross Income (MAGI) is over $500,000.  The deduction amount is reduced by 30% of the amount in excess of $500,000.  The deduction hits a $10,000 floor when your MAGI hits $600,000.

[dws1nzl · Accepted solution]

Sorry, I forgot to mention that our MAGI is well below $500k.

[DavidD66]

The program's default is to use whichever one is higher: itemized deductions or the standard deduction.  There is an option to switch/choose the other one at the end of the deductions section.  I suggest you go through that section and check and make sure you didn't somehow make that selection. 

It sounds like you're using the TurboTax Desktop program.  If that's the case, and you didn't inadvertently indicate you wanted to take the Standard Deduction, I suggest you go to Forms view and review your Schedule A and the Tax & Int Wks.  This will allow you to see what amounts are entered and transferring to you Schedule A.  

[dws1nzl]

You are correct.  After further review of the 1040/1040SR Worksheet, it appears that our AGI is greater than the $500k threshold and so that is why the standard deduction wins out over the itemized deductions.