I believe I found a bug in TurboTax 2025

[user17741347624]

I am claiming mortgage interest deduction on Schedule A.  For certain reasons, I am NOT claiming any property tax or state income or sales tax deduction.  When doing this, the AMT form (6251), on line 2a, substitutes the standard deduction value, even though instructions say to use the value from Schedule A, line 7, if you are filing Schedule A, which I am.  But it appears line 2a populates from Schedule A, line 5a.  In any case, when I look at Schedule A, line 5a as well as line 7, they are both blank, not '0', and in that case 6251, line 2a populates with the standard deduction value.  If I enter '0' on line 5a or override line 7 with a '0', everything populates correctly.  But when it first used the standard deduction, my AMT tax on 6251, line 11 jumps sky high!  Which is related to adding back the standard deduction value to my AMT income on line 2a, instead of 0 from Schedule A, line 7.

[maglib]

 During interview did you tell the program to used the itemized deduction? 

• go to Federal > Deductions & Credits and continue to the very end of that section until you see the screen that says "The Standard Deduction is Right for You!".
• Select "Change my deduction" to override the default and choose "Itemized" instead.
• Check State Impact: Note that choosing to itemize federally when the standard deduction is higher may not always be beneficial, particularly if your state requires you to use the same filing method

  Go to View on top> choose FORMS > choose Info Wks

  In part VI of the Info Wks Standard Deduction vs. Itemized Deduction do you have the box filled in on the top line to take itemized deduction regardless that the standard deduction is higher or something similar?

  Please let me know.  

@user17741347624

[user17741347624]

At the end of deductions, it told me that choosing Itemized would be better, even though my itemized deductions are less than my standard deduction.  So I chose Itemized.   I realized my property tax deduction had been mistyped, so I lowered it and noticed my tax bill went lower!  Then I completely removed my property tax and my tax due went lower still.  I then removed my sales tax deduction, and my tax due went up alot!  All this is due to the AMT impact that I'm right on the edge of triggering, and only the prop/sales taxes are added back to determine AMT taxable income, mortgage interest isn't! The joys of our tax code! That's when I tracked back to what was affected.  I corrected it by typing '0' in Sch A, line 5a.  

If I change Schedule A, line 5a from '0' back to blank, my tax due jumps again.

I have no state income tax; I'm in FL.

Mike

[maglib]

 AMT adjustments to income involve adding back specific tax-favorable deductions or income deferrals from regular taxable income to compute Alternative Minimum Taxable Income (AMTI). Key adjustments include adding back state/local taxes (SALT), the standard deduction, incentive stock option (ISO) exercise profits, and accelerated depreciation, Private Activity Bond Interest, NOL deductions, Passive Activity Losses.  Look over FORM 6251. If you take the Standard Deduction: Form 6251 starts with your adjusted gross income (AGI) and does not add back itemized deductions, as you didn't take them. If you Itemize: Your taxable income from Form 1040 is used, but specific deductions on Schedule A are reversed. If your itemized deductions are high, they "increase" your regular taxable income, but they are added back on Form 6251, which can trigger an AMT liability.

So as the STD Deduction gets added back to compute AMTI.  Using Itemized Deductions may create a lower tax liability, less gets added back to compute AMTI than when taking the standard deductions.  If you remove the AMTI adjustments from the itemized deductions though your AGI is higher and tax rate maybe higher.  It is just a math game.  You are not required to enter all the deductions  and can claim a lower amount but, make sure your return is completed before assuming the TT tax liability is correct that is shown (switch between screens as it often recomputes when deciding what works best.

So make sure to go back through the interview and answer you want to itemize and on the Info wks it should also indicate you want to itemize.  The Form 6250 should then NOT add the standard deduction back.  If it still does, have you fully updated your TT software?  (Many VPN's and virus checkers do not allow updates through so it can erroneously say up to date when it is not, make sure to allow TT through or temporarily turn them off to do updates).

You also maybe subject to Net Investment Income Tax Form 8960 that flows to 1040 Line 23. That is 3.8% on any income over a certain threshold. In general, net investment income for purpose of this tax, includes, but isn't limited to: interest, dividends, certain annuities, royalties, and rents (unless derived in a trade or business in which the NIIT doesn't apply),income derived in a trade or business which is a passive activity or trading in financial instruments or commodities, net gains from the disposition of property such as stocks, bonds, mutual funds, and real estate (to the extent taken into account in computing taxable income), other than property held in a trade or business to which NIIT doesn't apply, and generally net gains from the sale of an active partnership or S corporation ownership interests.

@user17741347624

[user17741347624]

1. I have selected to Itemize deductions; the figure on 1040, line 12e, matches the total from Schedule A, line 17, and the box on line 18 is checked (use itemized deductions even if they are less than the standard deduction).

2. If Schedule A, line 5a is '0' (it was blank when I had no sales tax entered, I had to override by typing a '0' in this field), then everything else is fine, including Form 6251, line 2a, which matches my Schedule A total.

3. If Schedule A, line 5a is blank, then Sch A, line 7 is also blank, and then Form 6251, line 2a is changed to my standard deduction, which is much higher than my itemized deductions, and causes my AMT tax to be much, much higher!

[maglib]

@user17741347624   You stated you fully updated the program and it took updates so it is not just your security software stopping them.  You should not override anything in a program as that can cause errors and miscalculations and why it is picking the Standard Deduction for AMTI calculation.   Instead of overriding by entering zero, call up the "Tax & Int Wks"  that feeds the Sched A  and change line 1a1 (income for state tax ded calculation) to 0 and 2a (your real estate taxes paid) to 0.  This will then have 0's on the Schedule A.  

See if that works.

If not then please send a Token that eliminates all personal info by going to top tab choose ONLINE then send tax file to Agent and I will ask a TT agent to check your return as I can't see it.  Post the Token number you get.

[user17741347624]

This is a TurboTax bug, and is simple to replicate. 

Go to Schedule A, line 5a, and then click on "goto supporting form".  This takes me to the Tax and Interest Deduction Worksheet" but highlights line 1a(1).

Looking further on the "Tax and Interest Deduction Worksheet" line 1i is '0.00', since lines 1b through 1h are all blank.  Line 1i is then supposed to populate Schedule A, line 5a.  But it doesn't.  Schedule A, line 5a is blank, when it should be zero!  This causes Schedule A, line 7 to also be blank.

This then causes AMT form 6251, line 2a to use my standard deduction value when it should be getting the value from Schedule A, line 7. 

I then override a blank field with '0', on Schedule A, line 5a.  This is not the source of any problem.  Changing a blank deduction field to zero shouldn't change anything.  Yet it fixes the issue with the wrong value being used in the AMT form 6251, line 2a.  It now contains '0.00' instead of my standard deduction amount. 

[maglib]

Please send the token as I promise easiest way to get help from them to fix things.  Additionally, I requested a moderator to contact you.

[user17741347624]

While this explains some of the details and intracacies of the AMT, this does NOT solve the problem. 

[maglib]

Please send token so they can see your problem. Again they were contacted.  It does  not solve problem but, I do not work for TT. Trying to help and I promise, fastest way is sending a token.