Incorrect standard deduction figure?
by Mortgage Rates on Tuesday, November 2nd, 2010 | 4 Comments
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Turbotax is likely figuring the standard deduction increased by your property taxes. You have two ways of claiming property taxes. One way is to take the full amount as an itemized decution on Schedule A. The other way is to claim up to $500 ($1000 if married filing joint) on Schedule L and increase your standard deduction by that amount. Since the $6200 is a greater deduction for you, that is the better way to go.
Even though you do not itemize, you can add up to $500 of property tax to your standard deduction. This means your standard deduction is $5,700 plus $500, or $6,200. Since this is greater than your Schedule A deductions of $6,170, your software put the larger amount on your tax return.
The standard deduction can be increased by certain real estate taxes, new motor vehicle taxes, and net disaster losses. TurboTax has determined that the increase is $500 is your case. If you did not pay real estate taxes or new motor vehicle taxes or have disaster losses, then you misentered something and need to fix it. Most likely, you entered something as a real estate tax; if you enter $500 or more for real estate taxes, that will cause an increase of exactly $500 in the standard deduction.
You can add $500 of your property tax to the standard deduction if you don’t itemize. That’s where the other $500 came from.