When I enter my property taxes in the past it always lowered my Federal tax due amount, but this year there is no change. Why is that?

[BobPell]

When I enter my property taxes in the past it always lowered my Federal tax due amount, but this year there is no change. Why is that?

[JotikaT2]

It depends.

Were your itemized deductions higher than your standard deduction even after adding your property taxes?  If so, TurboTax is utilizing the highest deduction available to you by taking advantage of the higher standard deduction.

Standard deduction versus itemized deduction

You can review what deduction is being used on your return by logging back into TurboTax.

1. Go back to your "Deductions & Credits" Screen. 
2. Scroll down to the bottom and select "Wrap up Tax Breaks". 
3. You should continue through the screens until you see the following screen: 

Your information will be summarized based upon your input. Please note, TurboTax will select the option which provides the greater tax benefit for you. 

If however, you are itemizing, you may have encountered the limit on the deductible amount of taxes, which is currently capped at $10,000.  Any taxes that exceed $10,000 will not be deductible.

Deducting property taxes

[Ken888]

I just had a similar experience, that is, the Federal tax due amount was NOT lowered after I entered my property tax.  To be very specific, I have been logging the Federal tax due amount every step of the way. Here is the log:

1. The Federal tax due was $10,600 after having entered all income.

2. I entered $23,000 mortgage interest, the Federal tax due was lowered to $4,100. This appeared to make sense, given the fact I'm straddling the 24% and 32% brackets.

3. Then I entered $12,000 property tax. To my disappointment and surprise, the Federal tax due remained at $4,100, no change at all. This makes no sense.

This really puzzles me. Can you please help explain this? Thanks.

[CatinaT1]

Your deduction of state and local income tax, sales tax, and property taxes is limited to a combined total deduction of $10,000.

[Ken888]

Hi Catina, 

Thanks for the reply.

Yes, I'm aware of the $10,000 limit for the state/local taxes. Anything beyond $10,000 won't make a difference. In my case, $12,000 is over the $10,000 limit by $2,000.  But why didn't the first $10,000 make a difference at all when I entered it? The "Federal Tax Due" remained at $4,149 without changing a dollar! I'd appreciate if you can explain it. 

Thanks much!

[DaveF1006]

Two things may have happened. Either, your itemized deductions were not greater than your Standard deduction amount or your itemized deductions zeroed out your taxable income for the year. 

[Ken888]

Thanks for the reply, but no, neither was the case.

1. My itemized deduction was far greater than the standard deduction, and

2. The itemized deduction did NOT zero our my taxable income. 

I actually restarted my tax filing, by first deleting all existing turbo tax files. But It happened again -- as I entered more itemized deductions, the "Federal Tax Due" didn't always change, despite the fact that the amounts I entered were all tax deductible.  This is quite frustrating, to say the least.

--Ken

[BillM223]

I assume that you are not using the CD/download software or are using the Online product for which you have already paid. In both cases, you can see your actual Schedule A or at least the worksheets that populate (medical expenses, state and local taxes, mortgage interest, charitable contributions, etc.

Everyone can see the 1040; are you checking line 12 on form 1040 to see what your standard or itemized deductions are set to?

Note that the TurboTax summary screens in the interview will list everything you have entered, whether or not they are actually tax deductible. You have to rely on the actual return to see what is deductible.