TurboTax Premier Itemized vs. Standard Deduction

[mblanco59]

Hi.

My wife and I are 66 years old. Married, filing jointly.

My itemized deductions are about $15k (gifts/donations, real estate taxes, state taxes). Our standard deduction would be $34.7k. TT Premier keeps giving me a lower tax due ($263) with Itemized deductions than with standard deductions ($947 due). I don't see how this can be.

Complicating things is the table summarizing my 2024 and 2025 Deductions and Credits. Should the math for my Total Deductions be correct? Because it isn't. Honestly, there seems to be a bug and has caused me to lose some trust. I can provide screenshots of this if it would help.

Thanks.

[mblanco59]

It's also interesting that I just changed my itemized real estate tax from $10k down to $0, and my taxes due didn't change at all for the itemized scenario. I did notice that my Credits for Prior Year AMT have changed with each of the scenarios I've been playing with.

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

We will be able to see exactly what you are seeing and we can determine what exactly is going on in your return to provide you with a resolution.

[mblanco59]

Thank you for looking into this issue.

I've sent you a diagnostic file. My token # 415423855-67019722. I will be filing my state return in Illinois.

Regards.

[DawnC]

Thanks for the token with IL state return file.   The filter removed the first part of your token #, @mblanco59  -  Can you repost it, add some spaces between the digits or post a screen image of the number.   

[mblanco59]

Sure thing.

The first digits are:  [removed]

The last digits (again) are 67019722

Thank you.

[mblanco59]

Looks like it removed the first digits again.

I'll try this....

The first digits are:  415423855

The last digits (again) are 67019722 [restored] 

[DianeW777]

I reviewed the tax return and discovered a box on Line 18 of Schedule A was checked possibly by mistake. 'If you elect to itemize deductions even though the are less than your standard deduction, check this box.'

I was not able to locate this question quickly so I decided to remove the deductions from your tax return. Real estate taxes and donations were removed, which immediately allowed the standard deduction to take precedence. I suggest you take the same action to clear the way for the standard deduction for your return.

@mblanco59 

[mblanco59]

Hi again.

I think I may have uncovered the unknown I had been trying to find.

I couldn't understand why my total tax would be higher with taking a Std Deduction ($34.7k) than with Itemized Deduction ($15.2k).

It looks like if I take the Standard Deduction (reducing my taxable income by the $34.7k), then I cannot also take the Minimum Tax Credit (to recover a prior year AMT paid).

If I do Itemize (reducing my taxable income by the $15.2k), I can also take the MTC (reducing my actual tax by over $10k in my case), which ends up being more beneficial.

Does all that make sense? I wasn't aware that I couldn't take both the standard deduction and the MTC. Do you know...is that a change for 2025?

[DianeW777]

No, it is not a new change for 2025; rather, it is a long-standing rule that if you are subject to the Alternative Minimum Tax (AMT), you cannot use the standard deduction to reduce your AMT income. The Minimum Tax Credit (MTC) is designed to help you recover that difference in future years when you pay regular tax.

Using the Credit: If you did pay AMT in the past, you can apply the resulting MTC to reduce your regular tax liability in 2025, even while taking the standard deduction, provided your regular tax exceeds your tentative AMT for 2025.

Review your Form 8801 in each scenario. You do not have to take the standard deduction. IRS tax law allows you to choose between taking the standard deduction (a flat amount based on filing status) or itemized deductions (listing out specific expenses). Most taxpayers choose the option that reduces their taxable income the most and results in lower taxes.

@mblanco59