Electing to take the $300 charitable contribution deduction on the federal return seems to force the Kentucky return to take the standard deduction even though there are enough deductions for Kentucky to itemize-- anybody know a way around this??
I'm not sure what you are talking about - i understand the 300 has to be added to get to Ky AGI- but the standard deduction is 2650 per person in KY, so on this return they have 7800 in mortgage interest but the program is forcing the 2650 standard as opposed to itemizing on Ky whenever the election to take the 300 on the federal return- certainly not the way i read the "plain English"-
My apologies for mistaking that your question was about KY treatment of the above-the-line deduction for cash contributions. It does look like there's a bug in the tax logic. In this case, itemized deduction should be allowed on the KY return.
@IntuitAustin @IntuitBettyJo There seems to be a problem in the tax logic for KY in relation to itemized deduction, which should be allowed on the state return regardless of whether the taxpayer claims standard deduction on the federal return.
PTO erroneously limits the taxpayer to claiming standard deduction on the KY return whenever the preparer "forces the standard deduction" on the federal return either because cash contribution is to be deducted above-the-line or because an override for 3=force standard deduction [Override] is selected, even though KY Sch A would produce a higher deductible amount. This is not a problem when itemized deductions are taken on the federal return.
The most logical solution could be to update the tax logic for PTO to determine automatically when cash contributions should be deducted above-the-line or as part of Sch A. Otherwise, there should be an override under Deductions > Itemized Deductions (Sch A), on the State & City tab, to "force" itemized deduction on KY, which is not ideal.
Still an AllStar
I spent 2 1/2 hours on the phone yesterday with Lacerte and the representative that I spoke with understood what I was saying but could not get those above her to budge. I am sorry that I didn't write a full and accurate description of the problem but I had writer's fatigue from writing two different cases explaining how the program was incorrect. I even stated verbatim the instructions from the Kentucky Schedule A and a written response from the state that I received which it states in part that you are allowed to take the greater of the itemized deductions or standard deduction for Kentucky purposes regardless of how you reported itemized deductions for federal purposes.
If the programmers would have followed the wording of the new law that allowed this deduction they could have programmed it correctly. The wording for this deduction is as follows:
The CARES Act permits an eligible individual to claim an above-the-line deduction of up
to $300 for qualified charitable contributions made during the 2020 tax year. This means
that for taxpayers who do not itemize, the $300 deduction is in addition to the standard
deduction. The deduction is limited to $300 for single, HOH, QW, or MFJ filing statuses,
and $150 for MFS.
I was answered with what I considered was a smug response from a Rachel from support which is stated verbatim as:
"This unexpected behavior has been determined to be working as designed. The program will optimize to produce the most beneficial deduction."
Well this response is wrong in all ways as they force the standard deduction for Kentucky which clearly does NOT produce the most beneficial deduction when itemized deductions are greater than the standard. Furthermore, they programmed this incorrectly as I believe they took the easy way out.
This should have been an if then or question and should have been programmed that way. If the taxpayer doesn't itemize on Schedule A on the federal and has contributions then contributions up to $300 should be taken as an above the line contribution. Just look at the wording above.
Why should we check a button to basically force the standard deduction which for some inexplicable reason forces that standard deduction on the state return in order to get the $300 above line deduction?
I can tell you for a fact that Drake does this correctly, it automatically takes the contribution to line 10b of the 1040 without you having to check a box to do this and it also does not force the standard deduction on the state return. Tax Slayer also computes this correctly and does not force the standard deduction on the state return as well.
I am truly disappointed that Lacerte's tech rep's or programmers will not address this issue when it is clearly not in concert with the states tax law and it is not as Rachel said "will optimize to produce the most beneficial deduction", it clearly does not!
I wouldn't expect Intuit Support who don't even know the products they support well enough to understand tax law, not the least because they are not tax accountants. I've had my fair share of frustration with them that I don't bother calling them anymore unless it's absolutely, positively, affirmative, there-are-no-other-option, it's-a-live-or-die-situation kind of necessary.
You would have hoped that flagging critical issues like this to the moderators would help make things progress... They can't say that no one at Intuit knew.
One big problem with Intuit is that they have a tendency of classifying correction of critical technical issues, which are really bugs, as enhancement requests, which cause them to be assigned a much lower priority for resolution.
Perhaps, someday, it may really takes direct escalation to the IRS and state DoR to get technical issues resolved by Intuit.
Still an AllStar
Guys, this has apparently been updated in the latest version released around Feb 2 or 4. This was a problem this weekend but it has now been fixed as I just did a quick check.
You may like to verify that it's no longer a problem on your end.
Still an AllStar
Just looked at it a few minutes ago and saw that it was fixed. Contacted our administrator and she downloaded the new updates last night. I guess they saw the light and determined that they were not optimizing the deductions on the state returns.
Big shout out to everyone for responding to this issue that helped get it fixed because as I mentioned before, I spent 2 1/2 hours on the phone yesterday and was told to post to the community board to see if they could do an enhancement to fix this issue because they were certain that their program was doing this properly.