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How do you force Sched A to add the Standard Deduction to a casualty loss (Hurricane Ian) transferred from 4684?

TomW
Level 1
How do you force Sched A to add the Standard Deduction to a casualty loss (Hurricane Ian) transferred from 4684?
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1 Solution

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TaxGuyBill
Level 15

I agree.  But unless Congress changes things, it seems like they are stuck with Schedule A, and can't use the Standard Deduction on top of the losses.

View solution in original post

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clr600
Level 8

The loss will be added to the sch a and if it exceeds the standard deduction it use that amount if not then the standard deduction will be used.

TomW
Level 1

BUT, the Shed A itemized deductions are LESS than the standard deduction.  How do you force Sched A to use the higher amount instead of the itemized amount when combined with the loss?

 

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TomW
Level 1

How do I force it to do that?  It's only using the itemized plus the loss instead of the standard deduction plus the loss.

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Skylane
Level 11
Level 11

Edit…Sorry, didn’t see it…. https://www.irs.gov/pub/irs-pdf/i4684.pdf  did you follow the instructions on page 3?I’ll look for a workaround 

If at first you don’t succeed…..find a workaround
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TomW
Level 1

My program simply transfers the loss (Hurricane Ian - after 10% deduction) from 4684 to Sched A.  Sched A then simply adds it to the other itemized items (which are LESS than the Standard Deduction).  The Sched A total is then transferred to 1040.  There is no option to force Sched A to use the Standard Deduction.  Is this a program defect?  Or, am I missing something? 

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TomW
Level 1

Sorry to sound snarky, but it doesn't matter if 4684 was done correctly.  The amount transferred from the 4684 should NOT just add to the itemized deductions on Sched A.  It should add to the Standard Deduction WHEN the itemized deductions are less than the Standard Deduction (very common these days).  For example, what if you don't itemize?  Will the loss be the only amount on Sched A?  Then, only that amount would transfer to the 1040, completely ignoring the Standard Deduction?  Looks like a ProSeries defect - unless I'm missing something.

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rbynaker
Level 13

I'm curious, what happens if you force standard deduction (I think the checkbox is on the Fed Info Wks).  Is it smart enough to fill out Sch A correctly?  If not, I think a call to support is in your future.

While I think in a perfect world this would be one of the things that the software optimizes automatically, I wouldn't have the expectation that it does so.  I do expect it to have a mechanism to report this correctly if not itemizing though.

Of course the 4684 needs to be done correctly.  The numbers flow from there to Sch A.  Garbage in, garbage out so my step 1 would definitely be to get the 4684 done correctly.

Skylane
Level 11
Level 11

@TomW 

Using PS Pro, it worked for me. Test client used standard deduction of 28700 w/ Sch A 11616

Added 4868 loss 9500 results in deduction of 38,200

Check your entries on 4684 Worksheet. I used Hurricane Ian for the example. Worked fine.

 

If at first you don’t succeed…..find a workaround
TaxGuyBill
Level 15

@TomW wrote:
How do you force Sched A to add the Standard Deduction to a casualty loss (Hurricane Ian) transferred from 4684?

 

Did Congress change the law in the last few weeks about that?

If not, Hurricane Ian does not qualify for that provision.  It is not a "qualified" disaster for purposes of adding the loss to the Standard Deduction.

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TomW
Level 1

If I follow the directions on p. 3 and p. 6 of the 4684 Instructions referred to above - then I add the Standard Deduction amount (in my case $27,300) at line 16 of Sched A.  Well, then ProSeries added all the normal itemized deductions + the casualty loss amount (transferred in from 4684) + the Standard Deduction amount added on line 16 to come up with an inflated itemized deduction.  This would be great!  Could I just tell the IRS that my ProSeries program made the booboo?

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TomW
Level 1

Hurricane Ian is not a Qualified Federal Disaster.  I just ran a test myself.  It adds everything on Sch A to an inflated total.  Did your test include other itemized deductions (like mine) or was it blank except for the loss and the Standard Deduction force added at line 16 on Sch A.  I believe this is program defect that should be remedied by ProSeries.  The program should know how to do this without a manual workaround.  They need to work on the Sch A or or the Sch A wks.

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qbteachmt
Level 15

"Hurricane Ian is not a Qualified Federal Disaster."

From Form 4684 instructions:

"If you suffered a qualified disaster loss, you are eligible to claim a casualty loss deduction, to elect to claim the loss in the preceding tax year, and to deduct the loss without itemizing other deductions on Schedule A (Form 1040). See Qualified disaster losses and Increased standard deduction reporting, later."

So, I guess Congress made the omission.

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TaxGuyBill
Level 15

@TomW wrote:

Hurricane Ian is not a Qualified Federal Disaster. 

and the Standard Deduction force added at line 16 on Sch A.


 

 

Exactly, it is NOT a "qualified" disaster.  So the Standard Deduction should NOT be factored in or used.  That only applies for "qualified" disasters.

 

Skylane
Level 11
Level 11

I clicked on the wrong event.... IRMA instead of IAN. (old eyes) 

It works correctly with IRMA but as they stated above IAN was not declared federal disaster.

If at first you don’t succeed…..find a workaround
TomW
Level 1

Huricane is a Federally designated disaster. The disaster code from FEMA is DR-4673.  However, it is not a Qualified Federal disaster and is therefor subject to the 10% of AGI offset/deduction.

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TomW
Level 1

That's not my understanding.  You still can use the Standard Deduction plus the loss calculated on 4684.  The difference is there is a $100 deductible instead of $500 - and you must deduct 10% of AGI from the loss.  4684 handles this correctly.  But Schedule A does not.  You have to force feed the Standard Deduction on line 16.  Then Schedule A simply adds the forced amount to the loss (from 4684) AND all the other entries on Schedule A.  Program booboo.  

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TomW
Level 1

"Exactly, it is NOT a "qualified" disaster.  So the Standard Deduction should NOT be factored in or used.  That only applies for "qualified" disasters."

If this is so, then I may be wrong.  Could you cite where this is shown or stated on the Instructions for Form 4684, shown above?  

 

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TaxGuyBill
Level 15

You already pointed it out.  You said you were following the directions on page 3 for the "Increased standard deduction reporting", which is for a "net qualified disaster loss".

https://www.irs.gov/instructions/i4684#en_US_2022_publink100052996

 

And unfortunately, Ian is not "qualified" (unless Congress decides to retroactively change it).

https://www.irs.gov/instructions/i4684#en_US_2022_publink100011408

 

 

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TomW
Level 1

I think the Instructions for the 4684 are confusing, and certainly not clear.  It doesn't specifically state how to claim a non-qualified federal disaster (such as the third most expensive Hurricane ever - Ian).  I figure that means that the loss is reported on Sch A along with any other itemized deductions.  If you don't itemize and just take the Standard Deduction, it appears that your loss becomes moot.  Annoying to many of the victims. 

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TaxGuyBill
Level 15

I agree.  But unless Congress changes things, it seems like they are stuck with Schedule A, and can't use the Standard Deduction on top of the losses.

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