Jump to content
ATX Community

Sometimes itemizing is better even when standard is higher


jklcpa

Recommended Posts

I'm finishing up a joint return for a couple both under 65 and who were about $600 shy of exceeding the standard deduction.  It appeared on the surface that the standard deduction would give the higher refund, however there was a need to "force" itemizing temporarily (or so I thought!) in order to split the data and create a separate file in my program for only the wife to generate her married-separate nonresident DE return, and then I planned to remove the checkbox to again switch back to the (higher) standard deduction.

When I went back to the joint federal return, I found that their refund had increased by over $2,200 because using the slightly lower itemized deduction figure allows them to claim and use up the remaining AMT credit carryover on form 8801.

If the wife didn't benefit by filing that nonresident state return on a separate basis, I may have missed this and the $2,200+ credit would have continued to carry over. 

  • Like 5
Link to comment
Share on other sites

4 minutes ago, Abby Normal said:

I have never seen an AMT credit. I was beginning to think they didn't exist. Just rare as unicorns, I suppose.

I know, I was shocked too.  I've only seen one other client use the credit, and that was only very recently, probably caused by the TCJA changes to AMT thresholds.

  • Like 1
Link to comment
Share on other sites

When the itemized is close like that, I almost always wind up checking to see what forcing the itemized will do since VA only allows you to itemize for the state if you do for the federal.   Sometimes it is better to pay a little more on the federal to save a whole lot on the state.  But I have not had the situation that you describe show up. 

  • Like 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...