Amount on TT Schedule A, line 5a does not match what I input for estimated state tax paid in 2025

[maggie031]

I expect that the amount of state estimated tax entered for 2025 (i.e., the amount paid in 2025) would show up in Schedule A, line 5a. In my case, the TurboTax number is about 1.5% less than what I entered. Could this be an error?  Is there anything else that could cause this discrepancy?  I  did *not* itemize deductions in my 2024 tax return.  

[MelindaS1]

There could be a few reasons why deductible state and local tax on Sch A Line 5 isn't what you expected to see:

• Are you limited? The deduction for state and local taxes is generally limited to $40,000 ($20,000 if married filing separately).
• Did you make an estimated state and local tax payment for Q4 2025 in January of 2026? This cannot be deducted on the federal 2025 Schedule A if paid in the following year (It can be deducted next year, however). 
  • From the IRS instructions for Schedule A, remember to include these overlooked state/local tax payments, along with your quarterly estimates when figuring your Line 5 total: 
  • State and local income taxes paid in 2025 for a prior year, such as taxes paid with your 2024 state or local income tax return. Don't include penalties or interest.
  • State and local estimated tax payments made during 2025, including any part of a prior year refund that you chose to have credited to your 2025 state or local income taxes. 
• High-income earners may be subject to a phaseout of deductible state and local taxes. For 2025, the phase-out is triggered if your MAGI exceeds $500,000 ($250,000 if you’re married filing separately).
  • Learn more: TurboTax - SALT Deduction Explained: Limits, Eligibility, and Tax Planning Tips

To keep digging into the calculated total, you can check your inputs for state and local tax payments in the Desktop version of TurboTax using these steps:

1. Select Forms
2. Under Forms in My Return select Schedule A
3. On Line 5a, right click with your mouse into the box, and select Data Source from the drop-down
4. From the Data Source window, select Tax and Interest Deduction Worksheet
5. On this Worksheet, right click on Line h to find each page that flows into the total of Line 5a
   • These Data Source links are clickable, to quickly re-visit any entries that calculate the total
   • The data sources should include: Tax Payments Worksheet, Forms W-2 & W-2G Summary, or State Tax Refund Worksheet

[maggie031]

@MelindaS1 Thank you very much for your detailed response.  I have the desktop version of TT (I downloaded it), but am still trying to familiarize myself with the "quick zoom" feature of the forms.   From that I was able to determine that TT is handling the portion of the refund for 2024 taxes that was paid in 2025 as taxable income. IOW, the "deduction to the deduction" on Schedule A, line5,  is:

amount of 2024 refund to be taxed in 2025 =

((2024 estimated tax pd in 2025)/ (2024 estimated tax + withholding))  * total_refund  

That makes sense assuming that I am supposed to be taxed because some payments were made in 2025. However, I do not understand the "why" of it.  My understanding is that a refund from a tax year in which you did *not* itemize (i.e., took the standard deduction) is not taxable, no matter when all the estimated taxes were paid.  

The TT  reference:https://blog.turbotax.intuit.com/tax-tips/is-my-state-tax-refund-taxable-and-why-90/ says

When it’s not taxable

Your state income tax refund is not taxable if: 

• You claimed the standard deduction instead of itemizing on your prior year federal tax return.  
• You didn’t claim a deduction for state and local income taxes paid on your prior year federal tax return.

Tax Act and H&R Block have similar statements.

Also,  TT for 2025 asks about refunds for 2024. On the screen that says

Let's get some details from your 2024 federal tax return

Did you take the Standard Deduction or itemize?

[I selected]

O  I took the Standard Deduction.  

[I did not select "I itemized my deductions"]

And here's the kicker: after I click on the Continue button at the bottom of that screen,  the next screen says:

Good News!

Your refund isn't taxable.

This includes any state and local funds. 

TT knows when I made all my estimated tax payments. So which it is? Do I misunderstand the guidance that you are not taxed for refunds that are from a year in which you did not itemize, or is TT's "Good News!"  screen simply wrong or misleading? 

Apologies for the long post and congratulations if you made it this far!

[KrisD15]

It is true that if you use the Standard Deduction on your Federal Return and then get a state tax refund for that tax year, the refund is not taxable. 

The reason is this, if you took the Standard Deduction on your 2024 tax year Federal Return, you did not deduct state tax, therefore any state tax refund attributed to tax year 2024  (which is received in 2025) is not applicable. The refund is not reported, it is not taxable income. 

Even when a state refund IS taxable, that taxable refund has nothing to do with Schedule A. The taxable amount of the state refund would be reported on Schedule 1 and flow to your 1040 line 8.

Now getting back to your original question concerning Schedule A. 

Schedule A will pick up the amounts of Estimated Tax Payments you list as made for 2025 AND paid in 2025. The payment for 2025 Quarter 4 will not be included since that was made in 2026. 

If you had a 4th quarter 2024 payment made in 2025, you need to enter that on different screen from the payments for 2025. 

Deductions & Credits

Estimates and Other Taxes Paid 

Estimates     START or UPDATE

State estimated taxes for 2025     START or UPDATE

Enter the payments made

Only Quarters 1 through 3 will count for your 2025 Schedule A

Return to Estimated Tax Payments

2024 state estimated taxes paid in 2025     START or UPDATE

Choose the state and enter the amount

This total should show on your Schedule A line 5a since you did not pay a state tax liability with your 2024 state return filed in 2025. 

If the amount does not match, is the box checked on Schedule A line 5a indicating State Sales Tax rather than State Income Tax? 

[maggie031]

I believe I had already done everything that you suggest.   I delved a little deeper into things and found on the Schedule A Line 5   State and Local Tax Deduction Worksheet  that  it has the correct value for 2024 estimated taxes paid in 2025 (line 3 of the worksheet), but further down (line 19, "state and local refund allocated to 2025") it has the same value amount of 2024 refund to be taxed in 2025 as  computed by the proportioning equation I listed above.   IOW, it appears that Turbo tax has decided that I am putting that value towards my 2025 taxes.   I never use my returns towards the next year (just because I like to keep each year separate). Just the same, I double-checked my 2024 return and it shows none of the refund going towards 2025. 

I believe TT has a bug.  I poked around a little more and found some complaints from early in January regarding TT not handling the carry over information correctly.  The thread says the problem was eventually fixed, but users had to re-import their 2024 return and start again.  While I think my problem is still different (they were seeing all of 2024 estimated taxes going towards 2025, i.e., not just the paid-in-January ones), I have to believe we're stepping through the same area TT code. Perhaps the developers fixed one problem and created another?

I really appreciate all the help that I have gotten here, both @MelindaS1 and @KrisD15 .  Not sure what I'll do next. Probably try the two fixes that people used for the other carry-over problem: reimporting my 2024 return or having to going in and modify things myself.    

[MelindaS1]

Let us know how re-importing turns out and if you have any further questions! If you need to enter any manual calculations on Schedule A, the navigation is Forms > Form in My Return > Form 1040: Individual > Schedule A. From there, you just need to enter any values calculated on your own if they can be typed in, or right-click > Data Source, to jump to the appropriate worksheet to enter your data.

[maggie031]

Hello @MelindaS1 I

believe that I found the root of my problem. 

Under the " Wages & Income" tab:

- 1099-MISC and other Common Income, Tax refunds, 1099-G, 1099-MISC, 1099-NEC,1099-K

—- State and Local Tax Refunds on Form 1099-G

—-- Did you get a state or local tax refund in 2025?   [Yes / No ]

Based on the explanation given for that question, I originally selected "Yes" and input the amount of the refund. I changed that to a "No" and now everything works as expected.

It would be fair to say that I should never have entered this in the Wages&Income section. (I certainly won't repeat that mistake in the future.) But in my defense, I'll point out that the explanation in that area is misleading. It says:

StateRefundQuery

I  think the first bullet should say something like “You received a state refund for taxes you filed in a prior year *and* you applied some or all of last year’s refund to pay your 2025 estimates taxes”.  I.e., it should not use the word "any".

Thank you for all your help in this.  Without it,  I wouldn't have learned how to track all this down in order to diagnose.