The Enhanced Deduction for Seniors Seems Wrong

[SusanWeber]

The calculation is right up until line 34.  Then the phase out amount (calculated using the married limit) is subtracted from the single $6000 instead of the married $12000 amount.  We are not getting the whole deduction.

[xmasbaby0]

The “senior deduction” is added automatically by the software based on the date of birth and filing status you entered into MY INFO.  You do not need to take any extra steps to enter it. (And…the new senior deduction has nothing to do with whether you are getting Social Security)

The deduction is not on the same line as your standard deduction.  It is shown separately.on line 13b.

2025 STANDARD DEDUCTION AMOUNTS

SINGLE $15,750  (65 or older/legally blind + $2000)

MARRIED FILING SEPARATELY $15,750  (65 or older/legally blind +1600)

MARRIED FILING JOINTLY $31,500  (65 or older/legally blind + $1600)

HEAD OF HOUSEHOLD $23,625 (65 or older/legally blind + $2000)

For 2025 through 2028 there is an extra  deduction amount of up to $6000 per individual 65 or older filing Single, MFJ, or HOH which is phased out for taxpayers with modified adjusted gross income over $75,000 for single filers and $150,000 for joint filers.

(The deduction phases out completely at $175.000 Single or HOH, or $250,000 joint)

The $6,000 senior deduction will be calculated on 1040 Schedule 1-A page 2 Part V Enhanced Deduction for Seniors which goes to 1040 line 13b. It is separate and in addition to the Standard Deduction or your Itemized Deductions on 1040 line 12e.  Turbo Tax automatically includes it.

IRS Schedule 1-A
https://www.irs.gov/pub/irs-dft/f1040s1a--dft.pdf

Need to see it?

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/preview-turbotax-online-retur...

If you are not getting the senior deduction it is because

Your date of birth in MY INFO shows that you were not 65 by the end of 2025

Your income is too high

You are filing married filing separately

[VolvoGirl · Accepted solution]

Sorry, Turbo Tax is doing it right.  This is a common misunderstanding. If you are both over 65 and in the phaseout amount, the 6% reduction is subtracted from EACH spouse's 6,000 effectively making it 12%.

It is phased out for EACH spouse. Fill out Sch 1-A yourself and see. It's pretty easy. Then why would they even have 2 lines 36a and 36b for spouse on Schedule 1-A?

IRS Schedule 1-A
https://www.irs.gov/pub/irs-pdf/f1040s1a.pdf

See IRS instructions for 1040 line 110
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

[G69T1M3nH760V6c]

I'm with you. We're both over 65, all the calculations are doing using the joint numbers, but then when it comes to the extra deduction all of a sudden, it uses the single 6,000 limit instead of the joint 12,000 limit. But, it's probably the IRS rule not Turbotax that screwed it up.

[CatinaT1]

Review your my information section and make sure there is not a typo in the dates of birth.  Are you in the phaseout range? 

Like xmasbaby and VolvoGirl said, the deduction is automatically calculated by TurboTax if you qualify. The calculation will appear on Schedule 1-A page 2, Part V Enhanced Deduction for Seniors, which is then carried to your Form 1040 line 13b. 

The maximum deduction is $6,000 for each person 65. There is a phaseout of the deduction once your income (MAGI) exceeds $75,000 for single or $150,000 for married filing jointly (MFJ). On a joint return the phaseout is calculated separately for each person.

On a joint return the phaseout is calculated separately for each person, so the 6% phases out for each spouse. This deduction is intended to provide tax relief for seniors and is in addition to the existing Standard Deduction or your Itemized Deductions. Expires December 31, 2028.

[user17785269636]

I agree with you that it seems wrong.  In fact, I use Lacerte (which is an Intuit product) and in computing 2025 Estimated Taxes for individuals on the 2024 tax program, Lacerte deducts the 6% excess of Modified AGI over $150,000 from $12,000 (not $6,000) for MFJ taxpayers, which amounts to a much larger senior deduction.  I have used their 2024 program recently to calculate 2025 estimated federal tax for an extension and the calculation is still the larger one.  For example, the MFJ taxpayers' Modified AGI was $209,000; after subtracting $150,000, the $59,000 excess x 6% = $3,540.  Lacerte then used $12,000 and subtracted out $3,540, for a Senior Tax Deduction of $8,460.  Under Schedule A-1, the Senior Tax Deduction for each Taxpayer would be $6,000 less 3,540 for a net of $2,460.  So, the total deduction per Schedule A-1 would be $2,460 for each spouse, for a total of $4,920, which makes no sense.  The IRS can easily change this form, plus I would like to know why Lacerte continues to compute the Enhanced Deduction for Seniors to be $8,460 (I double-checked the extension two days ago on Lacerte's program and it was still $8,460).

[VolvoGirl]

Oh that was in the 2024 Lacerte program?   The new Senior Deduction started with 2025.  You need to use the 2025 program.   Seems like they haven’t updated the 2024 program for the actual finalized details.   I’m surprised it’s even in the 2024 program even just to do estimates.   I’ll have to check my regular Turbo Tax 2024 program and see how it shows.   

[VolvoGirl]

And try updating your Lacerte 2024 program.  

[AmeliesUncle]

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@user17785269636 wrote:

Under Schedule A-1, the Senior Tax Deduction for each Taxpayer would be $6,000 less 3,540 for a net of $2,460.  So, the total deduction per Schedule A-1 would be $2,460 for each spouse, for a total of $4,920, which makes no sense.  The IRS can easily change this form

plus I would like to know why Lacerte continues to compute the Enhanced Deduction for Seniors to be $8,460 (I double-checked the extension two days ago on Lacerte's program and it was still $8,460).

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That is the way the law was written.

It is very common for Intuit to have errors in their planning sections, especially due to retroactive laws, which is likely why the 2024 program is doing it incorrectly.  The 2025 program which prepares the actual tax return presumably calculates it correctly.

[VolvoGirl]

@user17785269636   I checked my 2024 Turbo Tax program.  For 209,000 I get $4,920.  So you need to check with the Lacerte people.   They probably have their own forum.

And I have several spreadsheets I've made:

Here's a table I made

[AikBkj]

@SusanWeber

I think you are absolutely correct.  I believe the IRS has failed basic algebra on this one. 

If a single person's senior deduction is phased out from $75,000 to $175,000, then a married couple's senior deduction should be phased out from $150, 000 to $350,000.

To do this properly, line 34 on Schedule 1A should say, "Multiply line 33 by 6% (0.06), but if married filing jointly, Multiply line 33 by 3% (0.03) . ."

As currently written on Sch. 1A, a married couple's senior deduction is completely phased out at $250,000.  Currently, this is effectively a huge additional marriage penalty.

[AmeliesUncle]

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@AikBkj wrote:

@SusanWeber

I believe the IRS has failed basic algebra on this one. 

To do this properly, line 34 on Schedule 1A should say, 

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You are misunderstanding things.  Congress wrote the law, not the IRS.  The IRS is doing it according to what Congress wrote in the law.  The law says the $6000 is reduced by 6%; it does NOT say the total combined deduction ($12,000) is reduced by 6%.

[user17785269636]

Yes, it’s in the 2024 Lacerte tax program for 2025 estimated tax use only.  Unfortunately, I retired recently and did not buy the 2025 Lacerte program but I used the 2025 estimated tax section in the 2024 program to do my 2025 extension, and I checked the box to apply the Big Beautiful Tax provisions.  I suspect you are correct in that Lacerte is not correcting the calculation of the Enhanced Senior Deduction in its  2024 program, even though they continue to update the program constantly.  I have no idea what Turbo Tax did in 2024.  I loved Lacerte but it’s quite expensive and I really don’t know what to use for my own return for 2025.  I used Turbo once over 25 years ago and it was way too slow for me. Can you recommend what version of Turbo professionals use and if it is much quicker than it was in the past?  Thanks so much. 

[VolvoGirl]

@user17785269636   I checked my Turbo Tax 2024 program and got the right Senior amount to estimate 2025.   I noted that above.   Most of us are just volunteers here.   I don’t know what versions a professional uses.   

What do you mean Turbo Tax was too slow?   I’ve never heard that description before.   

[user17785269636]

In Lacerte, for example, if I’ve paid for real estate taxes on my principal residence, I simply have to input that number and it’s done. In Turbo Tax, the program would begin to ask me questions, to wit: We see you paid real estate taxes on your principal residence; so, do you own the home you live in? I sigh and reply yes. Then Turbo says that, since I own the home, I must have mortgage interest. I reply that I don’t. Turbo then says, are you sure, as most people who own a home have a mortgage. I reply that I’m sure that I don’t have a mortgage on my home. That’s what I mean when I say Turbo is slow. I am a professional tax accountant and do not need Turbo to ask me questions and then ask me if I’m sure about my response. I believe Turbo has a simple program, a business program and perhaps others. I just wanted to know which program I will need for a tax return that has investments with divs., T-E income, foreign taxes, Sch D Gains and Losses, including wash sales, Sch C loss and Qual. bus. loss deduction for REIT divs, IRA and Pension income, Social Security income, etc.  I’m looking around for a program that is easy to input without questions being asked about every amount entered and will just give me a diagnostic at the end.  Any suggestions from you or anyone? It would be much appreciated!