real estate taxes in Turbotax

Hi,
Just started doing my taxes in Turbotax Deluxe, online. Have been using
Turbotax for the last 5 yeast (PC version).
I am itemizing deductions, but when I enter my real estate taxes paid, my CA
state taxes due are reduced, as expected, but there is no effect on Federal
taxes due, which seems odd.
Any idea what the reason could be?
Thanks all,
Etienne
Reply to
Etienne
Have you already entered all your other potential itemized deductions? Results won't be meaningful until you do.
What is your federal standard deduction, including real estate tax amount for 2008? This is based on your filing status and whether you/spouse are age 65 and/or blind.
Most likely explanation is you're using federal standard deduction and CA itemized deduction. You might also be hitting itemized deduction limitations due to AGI, which are different for federal vs. California (I don't remember the details of which items on Schedule A are limited by what percent).
-Mark Bole
Reply to
Mark Bole
The two most common reasons that your federal tax does not change when you put in a deduction are the following.
1. As Mark Bole suggested, your total itemized deductions might be less than your standard deduction, so TurboTax uses the standard deduction because it gives you a greater tax benefit. If this is what's happening, your federal tax might change if you enter a very large deduction - large enough to make the total itemized deductions more than the standard deduction.
2. You might be subject to AMT (Alternative Minimum Tax), in which case many itemized deductions, including real estate taxes, are disallowed. No matter how much you add to these deductions, your federal tax doesn't change because the deductions are disregarded. If there is an amount on line 45 of your Form 1040, that indicates that you are subject to AMT. You may find that if you add a deduction, the amounts on Form 1040 lines 44 and 45 will change, but one gets higher while the other gets lower by the same amount, so your total tax on line 46 does not change.
Bob Sandler
Reply to
Bob Sandler

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