Is anyone else having an issue with prior year state tax refund not showing as taxable when the client claimed itemized deductions in 2017?

[IRonMaN · Accepted solution]

Just because they itemized doesn't mean that they received a tax benefit from their state tax deduction.  Have you reviewed the calculations to see if the software is correct?

[Just-Lisa-Now-]

do other preparers not go through the state & local refund worksheet by habit?  seems like were seeing lots of these posts this year, I don't remember seeing them in years past...or am I forgetting?

[IRonMaN]

Maybe the software has a glitch and maybe some folks think that if you itemize you should just automatically pick up a refund.  So far it appears to be a glitch with the preparers rather than the software.

[cakins]

The recovery exclusion is zero.  If that's the case, the taxable can't be zero also can it?

[Just-Lisa-Now-]

The recovery amount less the recovery exclusion would be the taxable amount of refund...are you thinking one of those figures is incorrect?

[Just-Lisa-Now-]

ohhhh, I see.  Part II Line 5 doesn't look like its being pulled in from 2017, and its not an enterable field....but when the sales tax amount is brought into the mix, there may not be any recovery amount (as with my return)...I don't have another returns besides mine that's ready to look at....

[cakins]

Yes, that's the issue.  I just looked at three returns and all three are pulling in zeros for Part II Line 5 which isn't correct.

[rbynaker]

The Line 5 number pulls from the smart worksheet above, box B.

I suspect the problem with 99% of these is that the folks complaining transferred too early from 2017 and box C2 is checked for Sales Tax instead of C1 for Income Tax.

Intuit could do a better job of "follow the breadcrumbs" on these.  They changed the carryover worksheet a couple years ago and I think somewhere in transition they lost some of the QuickZooms.  In this case, Line 5 doesn't even have a "Cross-Reference" option available when you right click.  So unless you've spent a lot of time with the State Tax Refund Worksheet, you're just like a monkey with a typewriter trying to figure this out.

Rick

[cakins]

Rick sir, you are correct.  I did't notice the checkbox at C2.  That is the fix.  Thanks!