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Fix Virginia itemized deduction limitation logic #4505
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@martinholmer I see the issue here you are right. For one, we are capping the real estate taxes at the same 10,000 threshold which should not happen, but I had an additional question, How does TAXSIM handle the logic behind claiming zero state income tax? I see how it is beneficial in this case but is there a set rule - like e.g. if the unit has enough real estate taxes to cover the 10,000 cap - not sure if I am missing something here |
Per our conversation: --> will fix |
@martinholmer I will make an adjustment and the test will pass with one adjustment that I think might be needed in TaxSIM: The test above states that the tax unit does not itemize their federal deductions and the VA instructions imply that if itemizing federally, then the deductions need to be itemized on the state return: (similar language in the standard deduction): So I believe that TaxSIM needs to change their logic to accommodate that |
In the 0.766.0 version, it seems as if the VA itemized deduction calculations are incorrect. The case presented below illustrate what seem to me to be the problem.
The case has high AGI so its VA itemized deductions are limited on the limitation worksheet.
The case has mortgage interest of $14K and local property taxes of $24K. TAXSIM35 assumes this case fills out its federal Schedule A by claiming zero state income tax and $14K property taxes (the sum of which is capped at $10K on the federal form), in order to maximize its VA itemized deductions. This means that on the VA Schedule A, line 5a is zero and line 5b is $24K and line 10 is $14K. That means TAXSIM35 thinks this case fills out the Virginia LIMITED ITEMIZED DEDUCTION WORKSHEET as follows:
Tracing the internal calculation of the
va_reduced_itemized_deductions
formula reveals that PEUS fills out the SCHEDULE starting with line 1 (xlin1) being $24K (not $38K). I don't see how this can be correct. I am missing something?Here is the tax unit case:
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