Itemized Deductions

Program Considerations

• The program calculates and uses the higher of the standard or itemized deductions.

• The program carries to Schedule A the portion of self-employed health insurance not allowed as an adjustment to income.
• The allowed portion of investment interest expense carries to Schedule A. Form 4952 will print if applicable.
• If overall itemized deductions are limited by AGI, an Itemized Deductions Limitation Worksheet for the limitation calculation is generated. Use the Overall itemized deduction limitation field in Screen 25, Itemized Deductions to override the itemized deduction limitation.
• State and local withholding and estimated tax payments entered in their primary input screens flow to the Taxes You Paid section on the Schedule A automatically.
• The non-business portion of mortgage interest and taxes from a Schedule E rental home and/or a Form 8829 for a Schedule C flows automatically to Schedule A.
• An option is available to force Schedule A to print or to print when applicable. An option also exists to print supporting statements for itemized deductions with the return, with the worksheets, or not at all. For additional information on setting this option refer to the Before You Prepare a Return section (Program Operations tutorial).
• Beginning in 2004, a taxpayer has the option of deducting state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A. The Lacerte tax program automatically optimizes between the greater of sales tax or income tax to Schedule A.
  Generally, to figure the state and local sales tax deduction, a taxpayer can use actual expenses or the Optional State Sales Tax Tables in IRS Publication 600. (The program automatically optimizes between state and local sales taxes actually paid and those determined under the Table method.) The input fields for this calculation are found in the Taxes section.
  

How?

To enter itemized deductions:

1. Open the sample client.
2. Open the Itemized Deductions screen from the Contents tab.
   
3. Enter the information from the Itemized Deductions table above in the appropriate input fields.

Tips & Shortcuts

For more comprehensive instructions on entries in the Itemized Deductions screen, click the Help Me button from within the input screen.

Review

You should have entered itemized deductions for the sample return and produced the following results on Schedule A:

Troubleshooting

Problem: The tax preparation fees are not included in line 28 on Schedule A.

Solution: Miscellaneous deductions are subject to the 2% AGI limitation.

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