Were we suppose to make a manual adjustment to the RE taxes on 8829, when SALT exceeded 10K on Sch A?

[Just-Lisa-Now-]

I saw someone in a FB group asking why ProSeries doesn't make this adjustment on the 8829 automatically...I didnt think that 8829 was subject to the limit, I thought it got first dibs on the RE taxes, then the remainder that flowed to Sch A was subject to the 10K limitation.

I honestly cant think of any of my clients that the situation would apply to, but I'm wondering if this was something I should have paid more attention to.

[George4Tacks · Accepted solution]

There is a nifty worksheet for line 11 (see page 3 of the instructions https://www.irs.gov/pub/irs-pdf/i8829.pdf) Lacerte does not do it either. I think Intuit is hoping IRS doesn't know how to do the worksheet, so we may all get off scott free. 

[Just-Lisa-Now-]

:+1:

[Just-Lisa-Now-]

I dont remember seeing anyone complain about this during the tax season.

[poolcleaner]

I remember going through some major messes in this situation so there is something in ProSeries that guides you to the problem.

[Just-Lisa-Now-]

well crap, Im reading the government instructions for Line 11 of 8829...."if you used standard deduction don't enter real estate taxes on line 11"...

But how do I know if I'm using the standard deduction until Im done with the 8829 and the mort  int and taxes flow over to it?

[rbynaker]

The short answer, it's just a bunch of grinding through math for the purpose of limiting losses created by an 8829 for mortgage interest (that may be disallowed if over the limit) and real estate taxes (that may be disallowed if over the SALT cap).  I generally don't have Sch Cs w/losses so it's been mostly irrelevant in which section of the 8829 we deduct the interest and RE taxes.

My guess is that ProSeries and Lacerte haven't implemented this because you can run into those "circular calculation" problems where you bounce back and forth between standard and itemized, which then changes the way the 8829 is calculated which then changes whether you should itemize, ad infinitum.

I love that Congress keeps coming up with new and fun ways to put unsolvable math problems into tax preparation.

Rick

[IRonMaN]

It's October 10th if I missed something -------- CAGMC.

Did I happen to mention to anyone that I can't post comments using Internet Explorer?  Every now and then I pull Firefox out of the closet to post comments, but I'm too used to using IE so that seems like a lot of extra work.  I'm really looking forward to having the new community up and running.  Did I ever mention that sometimes the anvils take their tool and I post things that really aren't true?

[Just-Lisa-Now-]

I was an Edge faithful until the beginning of summer (IE started giving me hassles before Edge) and I started having issues with it after a Win10 update and pages weren't loading right and were super slow...I converted to Chrome...and I gotta admit, I like Chrome better!

[rbynaker]

I'm sure it's just a security measure to keep hackers from posting comments after they take over your computer.  Or maybe they're beta testing a new multi-factor authentication method, you can't log in to the tax software unless you log in here and post a comment first.

The first couple weeks of October are a great time to tinker with the programming for things like this.  If you wait until later in the month or even November/December then there are too few people around to do the testing for you.

[abctax55]

Lacerte gives a diagnostic.  Every single one that I did the computation manually on came up with the EXACT same result.  

But it did give me something to do  /S