TurboTax calculation Error – State Sales Tax using Tax Tables

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  • #2188
    ftcnative
    Participant

    This is a heads up for all that itemize and use Sales Tax. This may affect many more since the SALT limit at $10k. It appears from my testing that the state table is only added to the local tax table amount in TT. The instructions (and online calculator for this) agree that the local tax table is multiplied by the local tax rate, then added to overall state tax table.

    Using the following values (comparison TT vs. IRS):

    $300K+ income, Family Size over 5, Boulder Cnty, Colorado (I used zipcode 80516)
    State Sales tax rate: 2.9%, Local Tax rate: 5.585% = total sales rate: 8.485%

    IRS CO state table: $1000, Local table A $334.
    IRS Calculator: $1000 + ($334 * 5.585) = $2,865

    TT results on Tax and Interest Deduction Worksheet (under Schedule A):
    state table: $1000, Local table $334
    Total deduction (1 b (9)) is: 1,334.00

    And for those in Colorado (where I did this calc) – State Sales tax is NOT re-added to the income when doing the State form – so leads to a full SALT deduction on State taxes as well. One new reason to look at using sales Tax instead of state income tax.

    #2192
    ftcnative
    Participant

    Quick update: Spoke with TT, their answer was for me to fudge the numbers of other tax items (car,boat,rv …) to make it equal to the IRS.gov calculation.

    Really – told to put invalid numbers in when an override of the calc results is all that was necessary.

    Another note: TT is insisting that I use State Income tax instead of Sales Tax. All combined, that would be an ERROR in the favor of the government by $316.

    Plus using Sales Tax this year means any State refund is NOT taxable income in 2019.

    #2256
    ftcnative
    Participant

    It appears that TT has finally fixed their calculation error (it may have been there in past version too – be cautious). TT does NOT, however, take SALT limits into account to decide state sales tax vs. state income tax use under SALT.

    Here’s what’s in the latest TurboTax for Windows CD/Download personal (individual) software update (R15.1) released Thursday, January 31:

    Fixed – Incorrect local sales tax rate calculations for several states

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