underpayment penalty process

Forum|Forum|1 year ago
March 11, 2025
1 reply
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When entering expenses, do I include the deductions for state tax paid and state tax withheld and then when i am over the $10K, does Turbo tax adjust for the overage when it deducts it and comes up with the total for the year?

RobertB4444

Level 15

Your state taxes paid will effect the itemized deductions up to 10K and then be used to figure your deductions in order to get to your taxes due. Any underpayment penalty is figured using those numbers. Any additional taxes paid over the $10K threshold on your itemized deductions don't effect your federal return.

@JST4

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JST4Author

Level 2

My question is, as I enter on the TT page for Itemized Deductions Schedule A, where it asks for amounts for

1/1/24-3/31/24

1/1/24- 5/31/24

1/1/24-8/31/24

1/1/24-12/31/24

My total through 8/31/24 exceeds the total TT has prepopulated. Then, when I calculate my total through 12/31/24 the difference between my total and TT total is the amount that TT shows on the summary of my deductions as the State and Local taxes greater than $10K.

SO- my question is- how to proceed.

1. Do I ignore it and assume it's OK since Turbo Tax's total lowered the State and local amount to reduce my deductions by the overage?

2. I paid a large amount to the state in April, so do I exclude any additional State and local tax amounts since I have exceeded the $10K at that point?

AND on the annualized income side, I entered the amounts as received in the date boxes. I have a capital loss carryover. Do I divide it by 12 and then add it accordingly so it accumulates over the year? Or do I do nothing, in which case TT takes it out for me in the 1/1/24-12/31/24 prepopulated total?

JamesG1

Level 15

I suspect that your total through 8/31/2024 exceeds the total TT prepopulated by the amount of sales and local taxes (SALT) that exceeds the $10,000 allowable limit.

If you actually paid more than $10,000 in sales and local taxes by 5/31/2024, do not enter any sales and local taxes for 8/31/2024.

The capital loss carryover may be divided by 12 and allocated over each month.

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