Solved: Form 8960

newark · ‎03-28-2019

I have questions on Form 8960. I have clients that have both state income taxes & inevestment expenses. Is it true that if taxpayer does not itmenize that they would not get to subratct anything against their tax for either state income tax & investment expense on the Form 8960? Also if you itemize, should you get at least some deduction for the state taxes paid?

I could not find any direct information that said you could not deduct investment expenses that were subject to 2% on Sch A, the form instructions say " if properly deducted on your return when calculating your U S regular income tax." It lists the same wording with both state income tax & investment expenses. That was on page 12 of the 8960 instructions. Similar words are on the 8960 worksheet on Proseries.

IntuitCharlene · ‎03-28-2019

For the Investment Expenses since Tax Reform removed the Miscellanous Deduction for them then they would not be on the tax return and there would not be a tax benefit for them. This news article has a bit more information.

https://www.cnbc.com/2018/06/18/this-investment-fee-tax-break-is-gone-what-that-means-for-your-ira.h...

As for how that impacts the state level each state has different rules and adaptations for the Tax Cuts and Jobs Act. Some states have adopted the new rules and some states have decided to be non-conformity and still allow deductions that were not allowed on the Federal this year. You would need to look at each state itemized Deduction worksheets and Schedules to determine if the state would still give a benefit.

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IntuitCharlene · ‎03-28-2019

For the Investment Expenses since Tax Reform removed the Miscellanous Deduction for them then they would not be on the tax return and there would not be a tax benefit for them. This news article has a bit more information.

https://www.cnbc.com/2018/06/18/this-investment-fee-tax-break-is-gone-what-that-means-for-your-ira.h...

As for how that impacts the state level each state has different rules and adaptations for the Tax Cuts and Jobs Act. Some states have adopted the new rules and some states have decided to be non-conformity and still allow deductions that were not allowed on the Federal this year. You would need to look at each state itemized Deduction worksheets and Schedules to determine if the state would still give a benefit.

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**Mark the post that answers your question by clicking on "Accept as solution"

IntuitCharlene · ‎03-28-2019

If on the Schedule A line 5a the Income Taxes Paid were higher then the Sales Tax AND the Schedule A is being filed instead of the Standard Deduction then a portion of the Income Taxes Paid may still flow to 9b of the 8960. If you double click on line 9b it will show the calculation of the portion applicable to the 8960.

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Rick890 · ‎04-01-2019

The answer posted by moderator Charlene_at_Intuit does not answer one of Newark's questions. If an individual filer does not itemize deductions on Schedule A, can he or she still get a deduction for state and local income taxes on Line 9b of Form 8960? Turbo Tax Premier does not provide one? Is this an error in Turbo Tax? Please answer.

sjrcpa · ‎04-01-2019

I have no idea about Turbo Tax. This forum is for users of Intuit Professional software. But if you take the standard deduction you get no state tax deduction on the 8960

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Form 8960

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