Standard Deduction

  • Starting with tax year 2018, the federal standard deduction roughly doubled. For 2023, the basic standard deduction is $13,850 for single and MFS filers, $20,800 for HoH, and $27,700 for MFJ/QSS. Those filing Single or HoH get an additional $1,850 if 65 or older, and an additional $1,850 if blind. For those filing MFJ, QSS, or MFS, the incremental amount is only $1,500 per person (taxpayer and/or spouse)
  • The standard deduction is the default in TaxSlayer. 
    • If a taxpayer is filing MFS and the taxpayer’s spouse is taking the standard deduction, the taxpayer must also take the standard deduction. Do not enter anything on Schedule A.
  • There are two situations when the taxpayer must itemize:
    • The taxpayer files MFS and the taxpayer’s spouse itemizes.
      • In such a case, go to the Force Itemized Deduction Instead of Standard Deduction page [Deductions > Itemized Deductions >Use Standard or Itemized Deduction] and click the button to force the use of the itemized deduction.
    • Either the taxpayer or spouse is a dual status alien or nonresident alien. [Such returns are out-of-scope.]
  • If the taxpayer is filing MFS and is unsure whether his or her spouse will itemize, and isn’t in communication with the spouse, then prepare the return in whichever way (itemize or not) most benefits the taxpayer but warn the taxpayer that if the spouse has already filed electronically, and if the choice doesn’t match what the spouse did, then the IRS will reject the return. 
  • TaxSlayer automatically selects the better of the standard deduction or the itemized deduction, unless the itemized deduction is forced for an MFS filing. There is no loss to the taxpayer (except time) if you enter information on Schedule A, but that information is not used. [Still, if entering that information clearly won’t to make a difference, don’t do it.]
    • If you want to see both the federal standard deduction amount and the calculated federal itemized total deduction based on input in TaxSlayer, go to the Compare Standard vs Itemized Deduction page [Deductions > Compare Deductions].
  • Note for CA state returns: It’s quite possible (see next section) that the taxpayer will benefit by taking the standard deduction on the federal return but itemize on the CA return. TaxSlayer determines separately whether itemizing is best for the federal return and whether it’s best for the CA return. 
    • CA itemizing is not done in the state section, it’s done by entering itemized deductions on the federal return. The federal section includes expenses that are no longer allowable on the federal return but are allowable on the CA return - unreimbursed employee expenses, for example.

When to Itemize

  • If it isn’t clear whether it’s advantageous for the taxpayer to itemize on the federal return, in general it’s best to go ahead and complete Schedule A. That’s in general. However:
    • Even if federal itemized deductions are likely to be larger than the standard deduction, DO A REALITY CHECK FIRST. On the federal return, look at Form 1040, Line 16, Tax, to see if this is zero. If it is zero, then there is no reason to itemize for federal purposes.
      • CA process note:  If you conclude that itemizing is pointless on the federal return, then check whether the amount on CA Form 540, Page 3, line 64, Total tax, is zero. If so, there is no point in itemizing for either the federal or state return: doing so would waste the taxpayer’s and your time.
  • Note for CA state returns: The CA standard deduction is significantly less than the federal standard deduction. For 2023, the amounts are $5,363 if Single or MFS, and $10,726 for the other filing statuses. So, if the taxpayer owes any CA taxes, as discussed immediately above, it’s much more likely that itemizing is worth doing – or at least enter enough itemized expenses so that line 64 becomes zero.
    • Note: If itemizing for CA, but TaxSlayer calculates that itemizing is not advantageous for the federal return, TaxSlayer may not include the Schedule A in the print packet. If the CA return includes a CA Schedule CA, the taxpayer will have itemized details. Otherwise, you should print Schedule A separately – this can be done from the Deductions menu page in the Federal Section.

Schedule A

  • Pages F-5 and F-6 of Pub 4012 are a comprehensive list of questions to ask the taxpayer to identify potential itemized deductions.
  • Page F-8 of Pub 4012 lists medical expenses that can and cannot be deducted on Schedule A; these are items that often come up in conversations with taxpayers.
  • TaxSlayer entry pages for Schedule A information are listed on the Itemized Deductions menu page [Deductions > Itemized Deductions; or use “Schedule A” in the search box.]

Schedule A - Medical and Dental Expenses (Line 1) 

  • The medical and dental expenses section of Schedule A should be done after all other parts of Schedule A are done, because it often takes significant time to review and enter the taxpayer’s information for this section, and that may be unnecessary effort.
    • After doing all other parts of Schedule A, see if Form 1040, Line 16, Tax is zero (via the Summary/Print link on the left navigation bar), and similarly CA Form 540, Page 3, line 64, Total tax (via a PDF of the state tax return). If both amounts are zero, do not enter medical expenses; they won’t benefit the taxpayer.
  • Medical expenses aren’t worth entering, for federal or state tax purposes, if they total less than 7.5% of AGI, (Federal AGI is Line 11 of Form 1040). If it’s worth entering medical expenses, go to the Schedule A - Medical Deductions page [Deductions > Itemized Deductions > Medical and Dental Expenses].
    • For each category on this page, expenses can be entered as a total or in detail.
      • Ideally, the taxpayer is responsible for calculating the total for each category (doctors/dentists, prescriptions, and so on), with only the totals entered in TaxSlayer.
      • If the taxpayer hasn’t totaled the expenses for one or more categories, and if there are relatively few expenses in a category, you may choose the option to click the blue box to the right of the dollar field, for each category where there are expenses. Then enter payments to individual service providers or enter payment groupings done by the taxpayer.
    • Pub 502, Medical and Dental Expenses, is the definitive guidance for this type of deductions.
  • Medical and dental insurance:
    • If the taxpayer is itemizing rather than taking the standard deduction, and if the taxpayer’s total medical expenses exceed the 7.5% of AGI threshold plus the net profit from Schedule C(s), then the taxpayer is generally better off putting all medical insurance premium costs into Schedule A rather than taking the Self-Employment Health Insurance (SEHI) deduction on Line 16 of Schedule1.
      • That’s because every dollar of the SEHI deduction reduces the QBI deduction by 20 cents – and thus affects taxable income by a net of only 80 cents, while every dollar on Schedule A, in the circumstances described, affects taxable income by one full dollar.
      • However, if the taxpayer would benefit from a lower AGI (for example, to reduce the taxable portion of Social Security income, or to reduce the amount of APTC that is repayable), then it may be best to take the SEHI deduction, since Schedule A expenses don’t reduce the taxpayer’s AGI. If in doubt, try both ways, to see which maximizes the taxpayer’s refund or minimizes the amount that the taxpayer owes.
    • Medicare premiums entered in the Social Security SSA-1099 page should not be entered again. Although TaxSlayer does not display those amounts on any Schedule A-related page, it will add them to what is entered directly on the Schedule A - Medical Deductions page.
    • Medicare premiums don’t always show on a Form SSA-1099:
      • If a taxpayer was 65 years or older during the tax year, they may be paying for a Medicare Supplement Insurance (Medigap) policy. These payments never appear on a Form SSA-1099.
      • If the taxpayer was 65 years or older during the tax year but did not receive Social Security, they may be paying Medicare premiums directly. 
    • On the Form CSA 1099-R of a federal retiree, box 5 is always health insurance premiums. However, if the retiree is having dental, vision, or LTC insurance premiums deducted from their annuity, such premiums will not show on the paper CSA 1099-R page. The only way to see these other premiums is to see the taxpayer’s Form RI 38-38, Notice of Annuity Adjustment. Codes are listed on the back of the form, such as: 
      • 42 is Federal Dental Insurance
      • 43 is Federal Vision insurance
      • Note: 45 is a catchall that includes Long-Term Care; enter the amount on the “Qualified long-term care premiums” line (below), not on the “Medical and dental insurance” line .
    • Amounts paid by taxpayers for a Marketplace policy, as evidenced by a Form 1095-A, do count as health insurance premiums. TaxSlayer won’t automatically include those on Schedule A.
      • However, when PTC is provided by the government to reduce the out-of-pocket cost of a Marketplace policy (for most taxpayers, this is the case), then insurance amount included on the Schedule A - Medical Deductions should be net of the PTC: that is, what is entered in TaxSlayer should be actual amount paid per the 1095-A, plus any APTC that must be repaid, minus any additional PTC allowed.
        • Look at Schedule 2 Line 2, Excess APTC Repayment, and Schedule 3 Line 9, Net PTC, to see if either is non-zero. If so, you need to calculate the net amount paid by the taxpayer. 
      • Since the Health Insurance section in TaxSlayer is normally done after the Federal Section, if the taxpayer has a Form 1095-A, do the following as you work on itemized deductions:
        • Enter, in TaxSlayer, as a first approximation, the total of the monthly premiums paid directly by taxpayer to the insurance company.
        • Create a note (page 8) saying that the amount of health insurance premiums paid needs to be adjusted based on the amount on Line 2 of Schedule 2 or Line 9 of Schedule 3.
      • After the Health Insurance section is completed:
        • Look at those two lines, and return to Schedule A to make the adjustment, if any (almost always there will be).
        • Update the note to state the amount that was adjusted based on Line 2 of Schedule 2 or Line 9 of Schedule 3.
    • Don’t include medical premiums paid using pre-tax dollars – these dollars reduced taxable income. 
    • Don’t include long-term care insurance premiums as part of “medical and dental insurance”; these are entered separately on the “Qualified long-term care premiums” line at the bottom of the TaxSlayer page.
  • Medical miles 
    • The number of medical miles driven is as an approximation for operating costs associated with a personal vehicle. Specific costs (gasoline, car maintenance, and similar) cannot be claimed.
      • The 2023 rate is $0.22 per mile. 
      • The 2022 rate was $0.18 per mile from 1/1/2022 through 6/30/2022 and $0.22 per mile from 7/1/2022 through 12/31/2022.
      • If the taxpayer has any costs for doctor visits, prescription medicines, or other things requiring travel, this field normally should have a number in it.
        • One obvious exception occurs when the taxpayer doesn’t own a vehicle.
    • All other transportation costs (bus, parking, tolls, taxicab fare, airplane tickets, and so on) are entered as “Other medical expenses.”
  • Other medical expenses
    • Other medical expenses must be entered by clicking the blue icon to the right of the dollar box (unless there is only one expense for that category).
    • Medical costs that are part of monthly fees in a senior residence are potentially deductible.
      • For seniors who live in a retirement community, particularly in assisted-living units, but also for those in independent-living units, a significant part of their monthly payments may be for the medical facilities and services of the retirement community, even if not used.
      • Seniors living in board and care facilities who have been declared by a medical professional as incapable of self-care or requiring constant supervision may be able to claim most or all the facility fees as medical expenses.
      • For a taxpayer to take this deduction, the retirement community must provide written information (typically  a letter to all residents), stating either a percentage or a flat dollar amount of fees that are for medical facilities and services.
    • Personal care services done in the taxpayer’s home are deductible as medical expenses if their primary purpose is to provide a chronically ill person with assistance with his or her disabilities. 
      • Such services must be specified in a plan of care prescribed by a licensed health care practitioner, and meet other requirements as described in the “Qualified Long-Term Care Services” section of Pub 502.
        • Note: If the taxpayer pays, directly, one or more individuals who provide the care services, rather than paying through an agency, and the total amount paid during 2021 to any single employee is over $2,400, then Schedule H, Household Employment Taxes, is required, in which case the return is out-of-scope. 
    • Lodging costs incurred while traveling out of town are deductible if the lodging is primarily for, and essential to, medical care, the medical care is provided by a doctor in a licensed hospital or in a medical care facility, and there's no significant element of personal pleasure, recreation, or vacation in the travel away from home.
      • This deduction is limited to a maximum of $50 per night for each person who receives the lodging. For example, if a parent and a sick child receiving out-patient care receive lodging, up to $100 per night can be deducted. 
  • Qualified long-term care premiums
    • The amount of long-term care (LTC) premiums that are deductible depends on age. For tax year 2023, the total that is deductible is $480 if 40 or younger on December 31, 2023; $890 if 41 to 50; $1,790 if 51 to 60; $4,770 if 61 to 70; and $5,960 if 71 or older.
    • The premiums are deductible only if they are paid for a “qualified” plan. To be "qualified," policies issued after 1996 must adhere to certain requirements, as described in Pub 502. Plans issued prior to that date must only have been approved by the insurance commissioner of the state in which they were sold.
    • In TaxSlayer, click the “Add Premiums” button to enter long-term care premiums.
  • On Schedule A of Form 1040, TaxSlayer will calculate and subtract the nondeductible amount of medical expenses, 7.5% of AGI.
  • Note for CA state returns: Medical expenses reimbursed by an HSA are deductible for CA but not for federal.
    • These expenses are entered on Form 8889 (see section Schedule 1, Line 13 -  on page 71).
      • A manual adjustment is required for CA Schedule CA - see Health Savings Accounts in CA, page 113, for further information.

Schedule A - State and Local Income and Sales Taxes Paid (Line 5a) 

  • CA process note: State and local income taxes paid, and sales taxes paid, are allowable deductions only for the federal return, not for CA. If the taxpayer is taking the standard deduction for the federal return, there is no need to enter these taxes on Schedule A in TaxSlayer.
  • For Schedule A, TaxSlayer will use the LARGER of (a) state and local income taxes paid or (b) general sales taxes paid.
    • The general sales tax figure always requires the preparer to enter some information in TaxSlayer.
    • For the state and local taxes, most of the time no additional information needs to be entered.
      • CA legal note: California does not allow localities to assess a local income tax on individual taxpayers. 
  • Go to the Schedule A - Taxes You Paid page [Deductions > Itemized Deductions > Taxes You Paid].
    • Note: This page is also used to enter real estate taxes paid (see the next section, below), personal property taxes (see two sections below), and, if needed, “other taxes” (four sections below).
    • Note: If you have previously entered information on this page or entered information about property taxes paid as part of entering information about mortgage interest, then when you click “Taxes You Paid”, you’ll go to a different page – it has the same title, but shows only one line of information, with dollar figures for “Real Estate Taxes” and “Personal Property Taxes”. Click the pencil icon (“Edit”) to get to the Schedule A - Taxes You Paid page where you can enter information.
  • State and local income taxes
    • TaxSlayer will include state and local income taxes from W-2s, all 1099 series forms, and estimated tax payments recorded in Payments and Estimates section of the Federal Section when calculating line 5a on Schedule A. Do not enter these amounts a second time. 
      • CA process note: CASDI entered in box 14 of TaxSlayer W-2 page is also automatically included by TaxSlayer in the total for state taxes paid.
    • In the first box on Taxes Paid page, enter the total of the following, if any: 
      • Any state taxes paid when filing the 2022 state tax return in 2023 [confirm with the taxpayer that any amount due on the 2022 state tax return was actually paid]
      • Any state taxes paid when filing a prior-year state tax return in 2023
      • Any state taxes paid when filing an extension in 2023
      • Any state taxes paid as part of a collection or installment payment agreement during 2023, regardless of the year(s) to which the payments applied.
    • In the second box on the Schedule A - Taxes You Paid page, enter the final payment to CA for estimated state income taxes for the 2022 tax year, if that final payment was made in 2023.
  • General sales tax
    • To enter the general sales tax amount in TaxSlayer, start at the Schedule A - Taxes You Paid page, and clicking the “Add Sales Tax Worksheet” button; that takes you to the Sales Taxes Deduction page.  
      • Now you have two calculation options – use the TaxSlayer worksheet for your calculations (easier) or use the IRS sales tax deduction calculator.
        • If you use the TaxSlayer worksheet and enter percentages [not recommended], be careful not to switch the local and state percentages. (For 2023, California state sales tax was 7.25%.)
        • If the taxpayer lived in multiple places in the year, or has significant untaxed income, use the IRS calculator. 
    • Large purchases: Both calculation options require that you determine if the taxpayer purchased a motor vehicle, aircraft, mobile home, or building materials (for a new home or substantial addition or renovation) during the year, and, if so, the sales tax paid, to be entered at the appropriate point in whichever process you select.  If the taxpayer purchased multiple vehicles, sales tax may be deducted for each purchase.
      • The sales tax is on the bill of sale or dealer invoice (as is the VLF for line 5c, below).  Do not try to calculate sales tax using vehicle price or amount the taxpayer said they paid.
      • Note: The person who made the purchase is the one who can claim this additional sales tax amount, if itemizing. So someone (say, a parent) purchasing a vehicle for another person, and not getting the title, can still claim the sales tax deduction, but not the VLF.
      • Note: “Purchase of a motor vehicle” includes vehicles which are being leased; sales taxes included in lease payments does count.
      • Note: For building materials, the sales tax must be separately listed on an invoice, and the invoice paid by the taxpayer, not by a contractor.
    • Untaxed income: Both calculation options involve the total income that was not included in the taxpayer’s AGI but was available for spending.
      • The most likely situations of untaxed income are tax-exempt interest (Line 2a), nontaxable IRA distributions (where Line 4a does not equal 4b - but rollovers and transfers must be excluded), and untaxed Social Security benefits (Line 6a minus Line 6b). Less common are types of income that are completely untaxed but typically go to lower-income taxpayers who don’t itemize: excludable Medicaid Waiver payments, Workers’ Compensation, disability insurance payments, and payments from public assistance programs. 
        • Keep in mind that the sales-tax calculators use income ranges, which begin at “less than $20,000”, and go up from there in $10,000 increments. You only need to get the range correct, not the exact amount that isn’t included in the AGI figure.
        • For a full list of untaxed income, see the General Sales Tax Deduction Income Worksheet at https://cotaxaide.org/tools/.
      • Warning: TaxSlayer displays its calculation of total income (“MAGI”) on the “Schedule A - Taxes You Paid” page; sometimes this is not even close to being correct. If you’re using the TaxSlayer worksheet to calculate general sales tax, review this figure to see if it is at least approximately correct. If not, enter an adjustment in the “Amount to Adjust the Calculated MAGI by” box (see next section), or use the IRS sales tax calculator instead of the TaxSlayer worksheet.
    • TaxSlayer worksheet calculation
      • At the Sales Taxes Deduction page, enter the ZIP code of the taxpayer.
      • If the taxpayer lived in only one place during the tax year, or two or more places in California with same sales tax rates, enter “365” for the days. Otherwise, enter the actual number of days that the taxpayer lived at the first location during the year.
      • If the taxpayer purchased a motor vehicle, aircraft, mobile home, or building materials, as discussed above, then enter the sales tax paid for such large purchases in the “General sales taxes paid” box; otherwise, leave this blank.
      • Click “Continue.”
        • If the number of days listed doesn’t total 365, because the taxpayer lived in more than one location during the year, and not all locations have been entered, then click “Add a Sales Tax Deduction” to add another location. 
        • If/when the number of days totals 365, click “Continue” again.
      • Back on the Schedule A - Taxes You Paid page, go to the “Modified Adjusted Gross Income” section at the bottom of the page, and adjust as needed.
        • Compare the MAGI figure to the AGI figure on Line 11 of Form 1040 (on Summary/Print page) for reasonableness.
        • For the sales tax calculation, TaxSlayer does know to add to AGI the amount on Line 2a (tax-exempt interest), plus the difference between Lines 5a/b and 6a/b (total vs. taxable pensions and Social Security), plus any excludable Medicaid Waiver payments.
        • In the box “Amount to Adjust the Calculated MAGI by”, enter (as a positive number) any untaxed income that TaxSlayer does not know about, because it isn’t reported at all on Form 1040. This includes Supplemental Security Income (SSI), veterans’ benefits, gifts, and inheritances.
    • IRS sales tax deduction calculator 
      • At the Sales Taxes Deduction page in TaxSlayer, go to the bottom and click “Click here” (sic), which will open a new tab on your browser. Click the “Sales Tax Calculator” button; on the next page, scroll down and click (bottom right) the “Continue” button. Select a tax year; click continue.
      • When you select the income range, it should include nontaxable income, as discussed above.
      • When the calculator asks about the sales tax paid on “specified items”, enter the sales tax paid on any large purchases, as mentioned above.
      • Answer the question “Did you live at the same address all [year]?” If “Yes,” a zip code field appears. Enter and confirm the taxpayer’s zip code. If “No,” it asks for the number of primary residences the taxpayer lived in, the zip codes for each primary residence, and the dates each residence was primary.
      • On the “Results” page of the IRS calculator, note the “Total General Sales Tax Deduction” dollar amount (it’s a good idea to print this page for the taxpayer’s records; it’s an even better idea to leave this tab open to show the quality reviewer).
      • If the first round of calculations wasn’t for a full year, click “Start Over” to calculate the general sales tax for the second (and any subsequent) location where the taxpayer lived during the year, and repeat the steps above, calculating the total for all localities.
      • Return to the TaxSlayer tab.
      • On the Sales Taxes Deduction page, scroll to the top of the page, then click “Override”, enter the amount from the IRS calculator, then “Continue.”
  • Note for CA state returns: Neither sales tax nor state income tax paid is deductible on CA Schedule A; TaxSlayer automatically adjusts CA Schedule CA Part II line 5.

Schedule A - Real Estate Taxes (Line 5b) 

  • In general:
    • Deductible real estate taxes are limited to properties in the United States. Real estate taxes can’t be for rental or business properties because a tax return with such property is out-of-scope.
      • Note: Sometimes mobile home owners are charged a “pass-through tax” that is ostensibly for property taxes. In fact, this is part of the rent paid by mobile home owners, regardless of the label; it can’t be claimed on Schedule A.
    • If a property has multiple owners, other than a married couple, property tax deductions can be taken by a co-owner only for the payments made by that co-owner, regardless of ownership percentages. If a non-owner makes payments on behalf of a co-owner, those payments are a gift unless otherwise specified by the donor, and only that co-owner can claim those payments on Schedule A. 
    • There is no limit to the number of eligible properties for which a taxpayer may deduct property taxes paid.
    • Most real estate tax information is now available online without registering or paying. If you don’t know the website where you can find a county’s information, or if you are looking for real estate taxes paid in other counties, a good website is publicrecords.onlinesearches.com/. (On the “Property” tab, scroll down to the “Property Records” section, and select “Assessor and Property Tax Records”.)
  • To enter real estate taxes, go to the Schedule A - Taxes You Paid page [Deductions > Itemized Deductions > Taxes You Paid]; enter the total for all deductible real estate taxes actually paid during the tax year, not what was assessed (see next two bullets).
  • CA process note: California real estate taxes are generally paid in two installments, due in November and February, but not delinquent until December and April, respectively. The amount entered on line 5b should be the amount actually paid in the tax year (some taxpayers do pay both installments at once, in November or December).
  • Legal note: States have received IRS guidance that real estate taxes not based on the value of the property may still be deductible:
    • Several types of charges are not deductible as real estate taxes:
      • Homeowners’ associaton fees (HOA fees), timeshare fees, and the like.
      • Fees for services provided to the property alone (for example, trash collection, water service, and sewer service).  Note:  Services such as city-provided rat or mosquito control benefit the entire neighborhood, not just the individual property, and thus are deductible.
      • Direct assessments for improvements that tend to increase the value of the property, such as curbs and sidewalks, or city or state-financed energy improvements. (These direct assessments can be added to the basis of the property.)  However, there are improvements that benefit an entire neighborhood which may be deductible.  The gov’t. will clearly call these a “tax”, rather than an “assessment”.  Online searches can often help determine whether a direct assessment is truly a tax.  Note:  the IRS has advised that “Lighting Zone” assessments are deductible, as improving an entire neighborhood.
      • Energy-saving projects paid through the property tax bill; these are often financed by a property-assessed clean energy (PACE) or home-energy renovation opportunity (HERO) program. (The interest portion of such payments is deductible as home mortgage interest if the loan that financed the project is secured by a lien against the taxpayer’s home.  The lender gives the taxpayer an initial amortization schedule, which they should bring.  If the taxpayer doesn’t have this, and it seems the taxpayer may benefit from itemizing on the federal or state return, ask the taxpayer to get a copy of the amortization schedule from the lender before completing the tax return.)
    • Because property tax bills can include items that are not real estate taxes, it’s important to review the actual bills (generally available online – see above, if the taxpayer did not bring these), rather than simply enter the dollar amounts paid. 
    • The nondeductible amount on property tax bills is divided equally between the two payments.  So for example, if the taxpayer paid only one of the two tax bills during the tax year, divide the nondeductible amount by two, and subtract from the payment amount, to get the amount to enter on Schedule A.  Or, if three bills were paid during the tax year (payment #2 from the prior bill plus both halves of the current bill), there will be three halves of nondeductible payments to subtract from the total of the three payments.
    • Note:  As property tax totals and nondeductible items usually change from year to year, technically you should separately determine the deductible amount for each payment, then total them for Schedule A.
    • Document your findings in a TaxSlayer note, per page 8.  For example, a note called “PROPERTY TAX” might say “Nondeduct.: $215 Sewer charge for 2022-3 payment 2, $230 for 2023-4 payment 1; Vector disease control $8 each payment; PACE.” (This would help next year’s preparer know what’s non-deductible for next year’s spring payment, since the taxpayer may not bring the previous bill.)
  • If the taxpayer bought and/or sold their home during the tax year, the real estate closing statement(s) must be reviewed, because it is almost certain that the taxpayer either paid real estate taxes at closing or was given credit for real estate taxes already paid.

Schedule A - Personal Property Taxes (Line 5c) 

  • Go to the Schedule A - Taxes You Paid page [Deductions > Itemized Deductions > Taxes You Paid].
  • The CA Vehicle License Fee (VLF) qualifies as a personal property tax. But the total amount paid to the CA DMV includes nondeductible registration fees and may even include unpaid parking tickets. Only the VLF amount is deductible.
    • There is no limit to the number of vehicles whose VLFs may be deducted by a taxpayer.
    • The VLF amount is on the DMV invoice sent to the taxpayer if the taxpayer has brought that form.
    • The VLF amount is often listed on the taxpayer’s vehicle registration card, near the bottom of the form, coded as “Lxxxx.”
    • The VLF can be looked up online, IF the taxpayer drove to your site or has the license plate number and VIN (both are on the vehicle registration card, and often on the car-insurance card): go to dmv.ca.gov/FeeCalculatorWeb/vlfForm.do.
  • If the taxpayer purchased a vehicle during the tax year, the bill of sale will include the VLF that was charged, as well as the sales tax paid (for line 5a, above).
  • If the taxpayer has a boat, an RV, or a vehicle trailer with a license plate, there are state registration fees for those, and the VLF amount of the fees should also be included on line 5c of Schedule A.
  • If the taxpayer has a manufactured home (mobile home) installed prior to July 1, 1980, they may be paying an in-lieu tax through their annual registration fee with California Housing and Community Development, rather than paying property taxes. The in-lieu tax is deductible as a personal property tax.

Schedule A – Total State and Local Taxes (Line 5e)

  • Beginning with tax year 2018, the total federal itemized deduction for state and local taxes (SALT) is limited to $10,000. TaxSlayer automatically makes this adjustment on Schedule A line 5e.
    • Note for CA state returns: Neither state income tax nor state sales tax is deductible for CA. But CA does allow deducting unlimited real estate taxes and personal property taxes, so enter the full amount of such taxes; the full amount flows automatically to CA Schedule CA Part II line 5.

Schedule A - Other Taxes (Line 6)

  • Note: Vehicle license fees should be entered in the “Personal Property” box on the TaxSlayer page, as discussed in the prior section; that will place them on line 5c of the Schedule A, when printed.
  • Entries for “Other Taxes” are rarely used, if ever. But if needed, go to the Schedule A - Taxes You Paid page [Deductions > Itemized Deductions > Taxes You Paid] to enter information in the “Other Taxes” section.
    • Homeowners’ association and timeshare fees are not taxes and are not deductible on Schedule A.
  • Line 6 can include foreign income taxes, but only when the taxpayer is not claiming a foreign tax credit on Schedule 3, Line 1, Foreign Tax Credit, as discussed on page 90. 
    • Claiming a foreign tax credit always results in less taxes owed than does itemizing, but claiming the credit is out-of-scope if the taxpayer paid more than $300 of foreign tax ($600 for MFJ returns), as discussed on page 90. The taxpayer may decide that using Tax-Aide is worth the loss of the credit. 
    • Warning: If itemizing is chosen, all foreign tax amounts entered anywhere other than Schedule A need to be zeroed out - there is no other way to keep these amounts off of Line 1 of Schedule 3. (Create a note, per page 8, about what is being done.) 
      • To zero out foreign taxes entered elsewhere in TaxSlayer, review all entries for 1099-INTs, 1099-DIVs, and the page Form 1116 - Foreign Tax Credit, where the total for all K-1 forms is entered.
    • Note for CA state returns: CA allows no deduction for foreign income taxes. If foreign income taxes are claimed on Schedule A line 6, then, in the State Section, “Itemized Deductions” page, enter the amount of foreign taxes as a subtraction, in the “Taxes You Paid” section.

Schedule A - Interest and Points Reported on Form 1098 (Line 8a) 

  • Pub 936, Home Mortgage Interest Deduction, has the most detailed information on the interest deduction.
    • Note: Debt incurred before October 14, 1987, is handled differently – see Pub 936 instead. 
  • Interest and points paid are usually reported on Form 1098. If they are not, the payments should be reported on lines 8b and 8c, respectively, of Schedule A, as discussed below.
    • Motor homes and boats that provide basic living arrangements generally qualify as main or second homes.
    • Emergency housing assistance isn’t taxable income, but if the assistance was in the form of direct payments to a mortgage holder, the interest portion of such payment(s) is not deductible on Schedule A.
  • Interest and points paid on a second home are treated identically to those for a main home, except deduction of points paid on loans secured by a second home, or to refinance a second home, must be spread over the life of the loan, and any allowable home equity loan must be on the main home only.
  • The tax code distinguishes between “acquisition debt” and “home equity debt”. Acquisition debt is a loan that is incurred in acquiring, building, or substantially improving a qualified residence of the taxpayer. Home equity debt is a loan secured by a property, but not used to buy, build, or substantially improve that property. To avoid confusion, “home equity debt” is referred to as “non-acquisition debt” in this manual.
    • Note that a home equity loan (HELOC) can be acquisition debt, if (for example) it was used for a major remodeling project, while a first mortgage, if refinanced with cash taken out for personal expenses, would be a mix of acquisition debt and non-acquisition debt.
  • What can be included on Line 8a:
    • Interest plus any points paid during the tax year in conjunction with acquisition debt, up to $750,000 ($375,000 MFS), is deductible if the loan was signed after December 15, 2017. If signed prior to that date, the maximum amount remains at $1 million ($500,000 MFS).
      • You must determine (a) when the loan was made, (b) whether the loan was originally made to buy, build, or improve the taxpayer’s home, or not; and (c) if a refinance of an earlier loan, whether the refinance was a larger amount than the original loan; and (d) if the refinance was for a larger amount, what was done with the cash that resulted from increasing the loan amount.
        • If some of the loan is determined to be nondeductible, create a TaxSlayer note (see page 8) so that interest can be correctly split between deductible and nondeductible in future years.
        • The (Mixed) Mortgage Interest Worksheet (https://cotaxaide.org/tools/ ) can be used to help determine how much of the interest paid on the mortgage is deductible.
      • Note for CA state returns: CA does not conform to the reduction in amounts; interest paid for a total of up to $1 million in acquisition debt ($500,000 MFS) is still deductible on the CA return, regardless of date signed. The difference (interest on loan amounts over $750,000 but not exceeding $1 million, if signed after December 15, 2017) must be entered manually on CA Schedule CA, as an additional deduction, as discussed in the section Itemized Deductions Treated Differently by CA, page 111, and in the section immediately following that section.
      • Interest paid on a loan obtained during the tax year to refinance an old loan that was used to buy, build, or improve a main home is deductible, up to the $750,000 limit, but points paid to refinance the mortgage must be spread over the life of the new mortgage. (Enter prorated points paid separately in TaxSlayer; create a TaxSlayer note - see page 8- so that points will be entered in future years. Example: a note called “POINTS” might say “deduct $133/yr thru 2029, then $135 in 2030”.) 
      • If the new loan was larger than the original loan, then you must determine if the additional amount was used to improve the home [in which case the related interest is deductible], or whether the additional amount of the loan was used for something else [to pay off credit card debt, for a vacation, or just put into a savings account, for example], in which case the related interest is not deductible.
    • Interest on loan proceeds used to pay special assessments on condominium owners is deductible if the special assessment was for capital improvements.
    • Interest is only deductible if a loan is secured by the home that it was used to buy, build, or improve. 
      • For example, interest for a second mortgage used to purchase a vacation home is not deductible. 
    • Repayment of principal is calculated as paying down the principal of the loan in this order: (1) non-acquisition portion; (2) acquisition portion that is over $750,000; and (3) remaining acquisition portion
    • Late payment charges are deductible as interest in situations where the interest is deductible.
  • As of 2018, there no longer is a separate $100,000 limit for non-acquisition debt. Interest (and points) paid on home equity debt is no longer deductible on Schedule A. 
    • Note for CA state returns: CA does not conform to elimination of interest and points on non-acquisition debt. Such interest and points are still deductible up to the limit of $100,000.
      • As discussed above, home equity debt can be part of a first or second mortgage, if refinanced, or from a home equity line of credit, if used for something other than to buy, build, or improve a taxpayer home.
      • Interest paid on home equity debt must be entered manually on CA Schedule CA, as an additional deduction, as discussed in the section Itemized Deductions Treated Differently by CA on page 111, and in the section immediately following that section. 
  • Go to the Mortgage Interest Reported on 1098 page [Deductions > Itemized Deductions > Mortgage Interest and Expenses > Mortgage Interest Reported on Form 1098].
    • For each 1098, report the information separately (click an “Add” button).
      • The second section on this page, “Real Estate Taxes (Non-Business Property)” is provided as a convenience by TaxSlayer since real estate taxes paid can be reported on a Form 1098 (if the borrower has an escrow account). Do not enter real estate taxes here if you have already entered them on the Schedule A - Taxes You Paid page for line 5a (see above); that will cause double-counting.
  • What should not be entered on the Mortgage Interest Reported on 1098 page:
    • Home mortgage interest paid to an individual (see the section immediately below).
    • Mortgage insurance premiums (box 5 of Form 1098) – this deduction is no longer available as of 2022.
      • Note for CA state returns: CA also does not allow deducting mortgage insurance premiums.
    • Reverse mortgage costs:
      • During the life of the reverse mortgage, the taxpayer doesn’t pay interest, so there is no deduction for interest that is accruing on this mortgage. 
      • In the year that a reverse mortgage ends and is paid off, the interest that is included in the payoff amount is considered to be interest on home equity debt and so is not deductible, per Pub 936, Home Mortgage Interest Deduction.
        • Note for CA state returns: CA does not conform. However, the amount of allowable interest is limited to that paid on a maximum of $100,000 (the maximum for non-acquisition debt) for each year the reverse mortgage was in effect, and a complex calculation is required once the mortgage amount exceeds that maximum. If the taxpayer owes significant CA taxes and could benefit from a large itemized deduction, refer the taxpayer go to a paid tax preparer.
  • If a property has multiple owners, other than a married couple, mortgage interest deductions can be taken only by the co-owner who made the mortgage payments, regardless of ownership percentages. If a non-owner makes payments on behalf of an owner, those payments are a gift unless otherwise specified by the donor, and only that owner can claim those payments on Schedule A.  
    • If the taxpayer was liable for and paid interest on a mortgage, but a co-owner (non-spouse) received a Form 1098 that includes some of the interest the taxpayer paid, the taxpayer can still claim all the interest s/he paid. But to do so, a statement must be attached to the return stating how much of the interest on that Form 1098 was paid by each owner, with the name and address of the person who received the form.
      • The easiest way to attach a statement is to use one or more Preparer Notes, of up to 1000 characters each, that are sent to the IRS with the e-filed tax return. Go to the Preparer Note page [Miscellaneous Forms > Explanations > ....] 

Schedule A - Mortgage Interest Not Reported On Form 1098 (Line 8b)

  • Home mortgage interest paid to an individual is reported separately from interest paid on a Form 1098
    • For example, the taxpayer might have purchased a home using a mortgage loan from a parent, and is repaying that loan, with interest.
  • If the taxpayer is missing a Form 1098 from a bank or other organization, and the missing information can be reconstructed from other sources (remember that monthly mortgage payments almost always consist of both principal and interest; only the interest portion of the monthly payments is deductible), that information is reported as if a Form 1098 existed (see the section above).
    • If the missing Form 1098 cannot be reconstructed, the taxpayer needs to contact the organization to get the missing form or do without it when itemizing. 
  • Go to the Schedule A - Interest Not Reported on 1098 page [Deductions > Itemized Deductions > Mortgage Interest and Expenses > Mortgage Interest Not Reported on Form 1098].

Schedule A - Points Not Reported On Form 1098 (Refinance) (Line 8c)

  • Points paid when a mortgage is refinanced can be amortized over the life of the loan; they cannot simply be deducted on the return for the year when the loan was refinanced.
    • To calculate the dollar amount deductible for a tax year, divide the amount paid (for points) by the number of months of the loan (30 years = 360 months) and multiply by the number of months that the loan existed during the tax year.
    • Note: If some of the interest on the loan is not deductible, then a proportional amount of the points paid is also not deductible.
  • If the loan is refinanced and a different lender is used, or if the loan is paid off early, the remaining deductible portion of the points from the paid-off or refinanced loan can be deducted on this line.
  • Go to the Points Not Reported on 1098 page [Deductions > Itemized Deductions > Mortgage Interest and Expenses > ....]

Schedule A - Investment Interest (Line 9) - out-of-scope

Schedule A - Gifts by Cash or Check (Line 11) – Charitable Contributions

  • To be included on Schedule A as a charitable contribution, a donation must be to a qualified charity (registered with the IRS).
    • If there is any question about eligibility, check the IRS database: irs.gov/charities-non-profits/tax-exempt-organization-search.
    • CA process note: Donations to the California College Access Tax Credit Fund may need to be reduced by 50% because of the state tax credit that such donations generate. For more information, see the section College Access Tax Credit, Code 235, CA Form 540, Page 2, lines 43-45, on page 114.
  • “Gifts by cash or check” includes checks, money orders, and credit card payments. Cash (that is, currency or coin) contributions are not deductible unless documentation is provided by the charity.
    • If a taxpayer purchases an item and donates it, new, to a charity, the donation is a monetary donation, not an “other than cash” donation. It is reported on this line.
    • If a taxpayer pays for care for others in the household to be able to leave their house to do volunteer work for a charity, the payments are not deductible as charitable donations.
    • A purchase of lottery or raffle tickets is not a “gift” (donation), regardless of how the charitable organization characterizes the purchase. (See page F-14 of Pub 4012 for other examples.)
  • The deductible contribution is the amount given less the value of any property or service received. For example, if donation results in the donor receiving a monthly magazine, then the full amount is not deductible.
  • You do not need to see any proof of donations, but the taxpayer should understand that no deduction is legally allowable unless there is adequate documentation prior to filing the return, and that the IRS – if there is an audit – will disallow contributions which are not properly documented.
    • For contributions of less than $250, the taxpayer must have at least one of the following:
      • Bank records (canceled check or bank/credit account statement) 
      • Written acknowledgment from the charity documenting the amount and date of payment to that charity
    • For contributions of $250 or more, taxpayers must have both bank records AND written acknowledgement, and the written acknowledgment MUST state the value of any property or service received by the taxpayer (for example, a magazine subscription) in exchange for the contribution. 
  • Donations made directly from retirement accounts to a charity are not taxable income (see the section 1099-R Form – Qualified Charitable Distribution, page 40), but also cannot be used on Schedule A; that would be double-counting.
  • Go to the Charity Cash Contributions page [Deductions > Itemized Deductions > Gifts to Charity > Cash Gifts to Charities].
    • The detailed information which can be entered on this page is for the recordkeeping of the taxpayer; it is not required by, nor reported to, the IRS.
    • One alternative to recording individual donations is to enter a total for each organization – Red Cross, Boy Scouts, United Way, etc. 
      • If this is done, enter the Date of Donation as Jan. 1 of the current tax year.
    • Another quicker alternative is to click the “Override” button and enter the total amount.

Schedule A - Contributions – Other than by Cash or Check (Line 12) 

  • The taxpayer should retain records of items and amount donated.
    • For any non-cash contribution claimed to be worth $250 or more, the taxpayer must have a written acknowledgment from the charity of what was donated. A receipt filled in by the taxpayer is not acceptable documentation. (See Pub 526 if more information is needed.) 
  • The amount of a non-cash contribution, for tax purposes, is the fair market value (FMV) of the item at time of donation.
  • Donations of vehicles, boats, and similar (Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes) which have a value of more than $500 are out-of-scope.  If the valuation by the charity was for $500 or less, the charity won’t send the taxpayer a letter with the precise valuation; the taxpayer may deduct $500. 
  • Unreimbursed travel expenses, such as parking and tolls, can be claimed as non-cash contributions.
  • Non-cash contributions whose total exceeds $5,000 (to be reported on Section B of Form 8283) are out-of-scope.
    • On the Gifts to Charity page, the last two lines, “Declaration of Appraiser” and "Donee Acknowledgement” are for donated property with an individual value of over $5,000. Therefore, the TaxSlayer pages for those two lines are out-of-scope.
  • In TaxSlayer, non-cash donations are entered in one of two ways:
    • If the total of all such donations is $500 or less, use the Schedule A Gifts to Charity Information page [Deductions > Itemized Deductions > Gifts to Charity > Non-Cash Gifts to Charities]. 
      • Enter only the total amount.
      • Note: This page is also used to enter mileage driven by the taxpayer for unreimbursed volunteer work or other charitable use; TaxSlayer will calculate the dollar amount. (The 2023 rate for charitable mileage is 14 cents per mile.)
    • If the total of all non-cash contributions exceeds $500, use the Form 8283, Non-Cash Donated Items page [Deductions > Itemized Deductions > Gifts to Charity > Non-Cash Donations (more than $500)]; note that if the total exceeds $5,000 the return is out-of-scope.
      • Each donation is entered separately; ten fields of information are required.
        • The IRS doesn’t require the cost or other basis of property, the date acquired by the donor, or how the property was acquired, if the fair market value of property on the day it was donated was $500 or less. Unfortunately, TaxSlayer does.
      • As noted above, for any one contribution claimed to be worth $250 or more, the taxpayer must have a written acknowledgment from the charity of what was donated. A receipt filled in by the taxpayer is not acceptable documentation unless signed by a representative of the charity.
      • For the method used to determine the fair market value, “thrift shop value” usually applies.

Schedule A - Casualty and Theft Losses – out-of-scope (Line 15)

Schedule A – Other Itemized Deductions (Line 16) 

  • In TaxSlayer, deductible expenses that go on line 16 of Schedule A are entered on the Schedule A - Miscellaneous Deductions page [Deductions > Itemized Deductions > Miscellaneous Deductions].
  • The following are in-scope expenses for line 16:
    • Gambling bets, to the extent of gambling winnings – see Gambling Winnings (Form W-2G, page 67)
    • Impairment-related work expenses (for a disabled person)
    • Claim repayments of more than $3,000
      • This is for situations where the taxpayer had to repay more than $3,000 that they had included in income in an earlier year – for example, unemployment benefits.
        • Note for CA state returns: If $3,000 or less, the repayment is subject to the 2%-of-AGI reduction and is potentially usable if itemizing on the CA return, though not on the federal return – see the next section. 
    • Unrecovered pension investments (includes annuities) 
      • If a taxpayer died during the tax year, and had a pension without survivor benefits, any unrecovered employee pension contributions may be reported on line 16 of Schedule A on the final tax return for that taxpayer. See Pub 575, Pension and Annuity Income, for details. 
  • The following miscellaneous deductions are out-of-scope:
    • Amortizable premiums on taxable bonds
    • Federal estate tax

Schedule A - Unreimbursed Employee Expenses and Miscellaneous Deductions Subject to 2%-of-AGI Reduction (No line on Schedule A)

Beginning with tax year 2018, expenses that were subject to the 2%-of-AGI reduction are no longer deductible on the federal Schedule A. They continue to be deductible if itemizing on the CA return, and are still entered in the Federal Section of TaxSlayer.


  • Note for CA state returns: California conforms to federal Schedule A deductions as of tax year 2015, so these expenses are allowable as a CA itemized deduction; they are reported on CA Schedule CA Part II lines 19-21.
    • TaxSlayer handles such “no longer valid for federal, but possibly valid for states” expenses by continuing to have them entered on federal itemized deduction pages. 
      • There are three pages used for entering such information. Most of the rest of this section is organized around those three pages.
  • First you need to understand what the 2%-of-AGI reduction means.
    • For example, if a taxpayer has a federal AGI of $50,000, the 2% reduction would affect the first $1,000 of such deductions – that initial $1,000 of deductions is not allowable on the CA return.
      • To continue the example, for a taxpayer with AGI of $50,000, assume the taxpayer has investment expenses on a broker’s statement of $1,250, and no other expenses subject to the 2%-of-AGI reduction. Then the net adjustment amount on CA Schedule CA, as discussed on page 111, would be $250.
    • If the total of expenses listed below, in this section, is less than the 2% threshold for a taxpayer, there is no point in entering the expenses in TaxSlayer.
  • Unreimbursed employee expenses other than job-related travel
    • Non-travel expenses, including union or professional dues, job search expenses, uniforms, tools, and job supplies, if not reimbursed by the employer, are entered on the Schedule A Unreimbursed Employee Expenses Information page [Deductions > Itemized Deductions > Unreimbursed Employee Business Expense].
      • Job search expenses must be for the taxpayer’s current line of work, can include costs for preparing and mailing a résumé, can include transportation, meals, and lodging expenses if a trip is mainly to look for a new job, and can include job placement and employment agency fees. 
    • Certain education-related expenses can be claimed here. Expenses must be for education that maintains or improves the taxpayer’s job skills or that the taxpayer’s employer, or a law, requires for the taxpayer to keep his or her salary, status, or job. But the education cannot be part of a program that will qualify the taxpayer for a new trade or business.
      • Educator expenses that were not for professional development may be claimed as a charitable deduction on the CA return. See the section Itemized Deductions Treated Differently by CA on page 112.
      • Educator expenses that can be claimed on the federal return as a deduction, but not on the CA return, can be entered here, not subject to the $300/$600 limit on the federal return.
  • Job-related travel expenses are entered on the Form 2106 Information page [Deductions > Itemized Deductions > Job-Related Travel Expenses].
    • If a MFJ return, select the person for whom the form applies. (You can later create a second set of expenses for the other spouse, if you want.) 
    • If expenses were partially reimbursed by employer, then Form 2106 cannot be used and the return is out-of-scope.
    • Vehicle expenses are in-scope only if the standard mileage rate is used. (The number of miles is entered in TaxSlayer; it calculates the dollar amount.)
    • Note that meals expenses are entered in full; TaxSlayer will calculate the allowed amount, using the stated percent, and put that amount on Schedule A. 
      • Beginning with tax year 2018, entertainment expenses aren’t deductible on the federal Schedule C. 
  • Other deductions, not related to employment, subject to the 2%-of-AGI reduction, are entered on the Schedule A – Miscellaneous Deductions page [Deductions > Itemized Deductions > Miscellaneous Deductions]:
    • Tax-return preparation fees
    • Safe-deposit box rental (if used to store investment-related documents)
    • Investment expenses (tip: Review all brokerage statements of the taxpayer.) 
      • Note: Investment expenses in box 5 of the Form 1099-INT and in box 6 of Form 1099-DIV, entered along with other amounts on those forms, should not be entered again in the federal Schedule A section. TaxSlayer automatically flows those expenses to CA Schedule CA Part II line 21.
    • Claim repayments of $3,000 or less (these are repayments by the taxpayer of amounts reported as income in an earlier year - but enter only if that income was treated as taxable by CA) – click the “Add Additional” button.

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