Clicked on "why the difference" for the sales tax deduction in the summary screen and saw this text in the pop-up window. The red bold text is clearly outdated as we are now allowed $40K. I really hope that TurboTax is not actually using $10K for the max deduction!
Why the Numbers Are Different - Sales Taxes Paid Deduction
If you have
Your sales tax paid amount entered includes:
- Sales tax you paid based on the sales tax percentage in the area in which you live (or the sales tax percentage for your state, if you don't know the sales tax rate in your local area). To calculate your deduction, we apply your sales tax percentage to your income using rules the IRS set up for this deduction.
- Sales tax you paid for big-ticket items, such as aircraft, boats, home additions, and home renovations is added to your deduction.
- Actual sales tax you paid. Instead of using the IRS calculation for your deduction, if you kept receipts for things you purchased during the year (including big-ticket items), you can use the actual amount of sales tax you paid.
Here's why you might not get the full amount of your sales tax paid deduction:
- Your total state and local taxes exceed $10,000 (or $5,000 if filing as Married Filing Separate).
The deduction for income taxes, real estate taxes, and certain other taxes paid to states and localities is limited to a total of $10,000 (or $5,000 if filing as MFS). If you paid more than this, the deduction for each of these taxes will be reduced so the total doesn't exceed $10,000 (or $5,000).
- You are taking the state and local taxes paid deduction.
You can deduct either the sales tax you paid or the state and local taxes you paid.
- You're taking the standard deduction.
TurboTax gives you the standard deduction if it's bigger than the total of all your itemized deductions. Because the sales tax paid deduction is an itemized deduction, you'll see $0 if your standard deduction is bigger than your total itemized deductions.
TurboTip: On your printed return, look for the sales tax paid deduction on Schedule A, Itemized Deductions.
More information
See state tax paid deduction.
