Filing MD tax return with itemized deductions calculation is incorrect

[smartcat1917]

I completed my Federal return with itemized deductions. For my MD return, the calculation of what goes on line 17b is incorrect, with no method of fixing it without doing an override (which means that eFiling is not possible). I just quit and used Maryland's own iFile process instead (both more accurate and less expensive, that is, free).

My Federal Schedule A in the section Taxes You Paid (all numbers are rounded examples):

5a. State and local taxes $5000

5b. State and local real estate taxes $10020

5c. State and local property taxes $0

5d. total of lines 5a through 5c $15020

This is limited by the SALT to $10000 in the Federal schedule A.

For Maryland in the section Deduction Method:

17a Total federal itemized deductions (from line 17, federal Schedule A): $20100

17b. State and local income taxes (see Instruction 14): Turbo Tax says $0, which is wrong.

Apparently Turbo Tax does a calculation of $10000 minus Federal line 5b, which results in a negative $20. Since negative results are not allowed, Turbo Tax rounds this to $0. Turbo Tax completely ignores what is in Federal line 5a.

According to the Maryland Tax Prep Instruction 14, as best as I can infer, if the value in Federal line 5d is greater than $10000, the value in line 17b should be the difference between Federal line 5d and $10,000, which is $5020, or at least the amount in Federal line 5a, state and local income taxes, $5000.

[KeshaH]

TurboTax is calculating line 17b of the Maryland 502 correctly.

Line 17b shows the amount of state income tax that was included in your federal itemized deduction that needs to be added back because state income taxes are not deductible for Maryland tax purposes.

$0 on line 17b means that you don't need to reduce your state itemized deduction. This is because, in your case, your federal itemized deduction is made up entirely of your real estate tax since it's over $10,000. Maryland follows federal law when it comes to the limit on state tax deduction - you can only deduct up to $10,000 in state taxes. This is why the negative $20 was disregarded.