Just got a computer IRS audit that has me quite confused. I’ve gotten them before, usually small stuff like a forgotten/lost dividend, or the last one where the sale of my primary residence was incorrectly tagged as income.
This one, for 2018, if I am reading it correctly, is just plain wrong and I only have an inkling where the numbers come from. They said my taxable income (line 10) is exactly $10,000 too low. At first I thought I must have fatfingured a digit, but I used TaxAct, and that would have been flagged. I double checked. Everything entered correctly
Their “explanation” made no sense. They claim that my tax return showed I used the standard deduction of $25,300, AND claimed the $10,000 SALT maximum! Which of course no tax program would ever allow. So they subtracted $10,000 from my deductions, which increased by taxable income the same amount.
Here’s the thing. I didn’t use the standard deduction, and the $25,300they claim that is entered on my 1040, of course, isn’t! Anywhere.
In fact, I itemized and took a smaller deduction ($24,500) than the standard because &@@! Virginia in 2018 required you to either itemized or take the standard deduction in both returns. You could not choose which ever gave you the smallest tax burden! In 2018, itemizing on both Federal & State, I paid the least amount in taxes total, vs standard deduction.
When you itemize, Taxact automatically inserts the $10,000 maximum SALT in Sch A, when actual taxes are greater. In my case they were $14,000. Of course Sch A was included, and the amount on Sch A is the amount in the 1040.
Is it possible that the IRS computer algorithm is so bad that when the Sch A amount was less than the standard, it assumes you took the standard and the $10,000 SALT? It makes no sense because the numbers they claim are no where to be found on my 1040. In fact, under the column marked “IRS changes” they show $0 for deductions and $0 for taxes, as if they were correcting for not itemizing and the SD was taken. But even if the computer was “correcting” a “mistake”, and applied the SD instead of itemizing, I would then be entitled to a refund because of the larger amount deduction. The $10,000 SALT only appears in a Sch A which would not have been used.
Of course, I will disagree with their findings and try to explain it, but I wondered if anyone else had such a blatant mistake forced on them by the IRS. I fully understand that no human actually looked at the return and all of this was computer generated, but surely I am not the only one to have gone with a lower Itemized deduction vs the SD for a reason.
Even crazier, I just noticed, there is actually a box, which is checked, on Sched A which states “If you elect to itemize deductions even though they are less than tour standard deduction, check here”!!!’
This one, for 2018, if I am reading it correctly, is just plain wrong and I only have an inkling where the numbers come from. They said my taxable income (line 10) is exactly $10,000 too low. At first I thought I must have fatfingured a digit, but I used TaxAct, and that would have been flagged. I double checked. Everything entered correctly
Their “explanation” made no sense. They claim that my tax return showed I used the standard deduction of $25,300, AND claimed the $10,000 SALT maximum! Which of course no tax program would ever allow. So they subtracted $10,000 from my deductions, which increased by taxable income the same amount.
Here’s the thing. I didn’t use the standard deduction, and the $25,300they claim that is entered on my 1040, of course, isn’t! Anywhere.
In fact, I itemized and took a smaller deduction ($24,500) than the standard because &@@! Virginia in 2018 required you to either itemized or take the standard deduction in both returns. You could not choose which ever gave you the smallest tax burden! In 2018, itemizing on both Federal & State, I paid the least amount in taxes total, vs standard deduction.
When you itemize, Taxact automatically inserts the $10,000 maximum SALT in Sch A, when actual taxes are greater. In my case they were $14,000. Of course Sch A was included, and the amount on Sch A is the amount in the 1040.
Is it possible that the IRS computer algorithm is so bad that when the Sch A amount was less than the standard, it assumes you took the standard and the $10,000 SALT? It makes no sense because the numbers they claim are no where to be found on my 1040. In fact, under the column marked “IRS changes” they show $0 for deductions and $0 for taxes, as if they were correcting for not itemizing and the SD was taken. But even if the computer was “correcting” a “mistake”, and applied the SD instead of itemizing, I would then be entitled to a refund because of the larger amount deduction. The $10,000 SALT only appears in a Sch A which would not have been used.
Of course, I will disagree with their findings and try to explain it, but I wondered if anyone else had such a blatant mistake forced on them by the IRS. I fully understand that no human actually looked at the return and all of this was computer generated, but surely I am not the only one to have gone with a lower Itemized deduction vs the SD for a reason.
Even crazier, I just noticed, there is actually a box, which is checked, on Sched A which states “If you elect to itemize deductions even though they are less than tour standard deduction, check here”!!!’
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