The system is defaulting to standard deduction even though my itemized deduction is over $20,000

Forum|Forum|1 year ago
July 26, 2024
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i loose $500 in an energy credit for next year if i use standard deduction this year

TurboTax Live Deluxe Online

Best answer by SteamTrain

Beyond that, most energy credits are applied, whether or not you use Itemized or Std deduction.

At least if you are talking about a Federal tax return....States that have a separate energy credit selection may differ.

Energy credits do tend to be non-refundable...meaning you must actually have a Federal tax liability to use them in a particular year. Thus, even if your assessed tax is zero for all your income this year, the credit will not be used this year.....but might carry-over to be used next year.

(I haven't checked recently to see if the carry-over can be used for all the energy credits.....or just some of them)

xmasbaby0

Employee

Are you making the common mistake of just adding up all the amounts for your itemized deductions without considering the caps and thresholds that must be met?

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts) The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income. The standard deduction makes some of your income “tax free.” It is not a refund. You will see your standard or itemized deduction amount on line 12 of your 2023 Form 1040.

2023 STANDARD DEDUCTION AMOUNTS

SINGLE $13,850 (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $13,850 (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $27,700 (65+/legally blind) ) + $1500 per spouse

HEAD OF HOUSEHOLD $20,800 (65 or older/blind) + $1850)

HOW TO FORCE ITEMIZED DEDUCTIONS

https://ttlc.intuit.com/questions/1900142-how-do-i-change-from-the-standard-deduction-to-itemized-or-vice-versa

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**