I have a NJ client that works in NY state. He did a bunch of sports gambling. His winnings and losses have been handled on the federal return. When I go to his NY to prepare the state return the winnings are taxable but the return is picking standard deduction even though he has way more than standard allowance. Contacted state and they said there are no income limits on claiming itemized deductions but I cant get the return to process itemized deduction. Please advise.
Correct. However the IT-196 is limiting the amount of itemized deductions allowed based on line 32 which is the federal amount not the NY AGI. Based on the instructions for form IT-196 it appears that the "adjustment" amount for the IT-196 is based on the federal AGI line 32 of form IT-203. Which is forcing the standard allowance to be used on the New York tax return because it is disallowing all of his itemized deductions. I have spoked to the NY tax department twice and they have no idea what I am talking about both representatives have said that the itemized deductions are not limited by your income. Pro-series rep said they are. I think Pro-series is correct but I would like someone to verify that before I tell someone they are gonna loose a $9K refund and instead owe $2K.
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