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June 6, 2019
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How do I fill out my 1040 to show an inheritance to be used in the calculation of my sales tax, and not be included in my AGI, such that the inheritance is not taxed?

  • June 6, 2019
  • 2 replies
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Best answer by rjs

When you go through the EasyGuide interview for the sales tax deduction, after you click Done on the "Places You Lived" summary screen, you get a screen that asks "Did you have any nontaxable income like this in 2017?" It gives a few examples of nontaxable income, but you are not limited to those. If you click Yes, the next screen gives you a box to enter the total amount of nontaxable income that you want to add for calculating the sales tax deduction. See the attached screen shots.

You don't identify the type of income, and you could include different types of income. You just enter the total. The amount is not identified as an inheritance or anything else. It will not be entered anywhere on your Form 1040, so it will not be included in your AGI and will not be taxed. It is only used to calculate the sales tax deduction.

2 replies

rjs
rjsAnswer
Employee
June 6, 2019

When you go through the EasyGuide interview for the sales tax deduction, after you click Done on the "Places You Lived" summary screen, you get a screen that asks "Did you have any nontaxable income like this in 2017?" It gives a few examples of nontaxable income, but you are not limited to those. If you click Yes, the next screen gives you a box to enter the total amount of nontaxable income that you want to add for calculating the sales tax deduction. See the attached screen shots.

You don't identify the type of income, and you could include different types of income. You just enter the total. The amount is not identified as an inheritance or anything else. It will not be entered anywhere on your Form 1040, so it will not be included in your AGI and will not be taxed. It is only used to calculate the sales tax deduction.

Employee
June 6, 2019

Since inheritance is not entered into the 1040 because it is not taxed, the inheritance cannot be included for the calculation of sales tax to be deducted on Sch A.

June 6, 2019
That is opposite from what I have been told (maybe in error) for 2017 (at least) returns.  I have been told you CAN include the inheritance in the calculation of sales tax, even though the inheritance in NOT taxable.
Any guidance / contradiction / reference?