How do you take a Federal deduction for a charity contribution that was taken as an AZ tax credit for 2020?

[WAAZCPA2762]

Taxpayer made a contribution to a qualifying AZ charity prior to due date in 2021 for a tax credit on their 2020 tax return.  Software did not transfer the credit over to 2021 to take as a federal deduction.  How do I enter it so it is included on the Federal itemized but not on the AZ itemized?

[qbteachmt]

"prior to due date in 2021 for a tax credit on their 2020 tax return."

What due date? Which tax return?

And if there is already the use of a credit in 2020, are you asking about a carryover?

More details always help.

[sjrcpa]

Can you take it as a federal itemized deduction?

The few that I have seen, you reduce the federal contribution deduction by the amount of the state credit. If client got a 100% credit there is no deduction.

[WAAZCPA2762]

As I noted in my original post, the contribution was paid in 2021 but was taken as a tax credit on their AZ 2020 tax return.  This is allowed.  AZ has organizations that qualify for tax credits.  contributions to these organizations can also qualify for a federal deduction.  AZ further allows a credit for contribution paid before the due date of the return, but that contribution is not allowed for a federal deduction until the return for that year is prepared.  So again contribution paid in 2021 but taken as a tax credit for state purposes in 2020 qualifies for a Federal deduction in 2021.  And Yes, I know the amount is then deducted from itemized deductions for AZ.  Lacerte generally has correctly applied this in the past, but I noticed for one of my clients it did not.  If add the contribution to the Federal Schedule A it automatically transfers over to the AZ Sch A, and I do not see a way in the software to reduce the AZ schedule A for this.  Does someone know how to do this correctly? 

[WAAZCPA2762]

Yes, its allowed as a federal deduction for the year in which it was paid, but it does need to be deducted from the State Schedule A.  I am not seeing where in the software this can happen.  The software generally did this automatically if entered as a State credit the year before, but it somehow did not this time.