Car Sales Tax: Federal Deduction Can't Be Claimed on 2009 Georgia Return

TurboTax incorrectly applied a federal tax deduction for new-car sales taxes to certain Georgia state returns filed before April 28, 2010.

The one-time deduction was part of the 2009 federal stimulus program, but the state of Georgia did not allow the deduction on state returns.

This issue affects customers who filed their Georgia state returns before April 26, 2010 using a desktop or CD product, and before April 28, 2010 using TurboTax Online.

Affected Georgia customers who claimed the deduction will need to amend their state return and pay any taxes due.

1. Before amending your state return, please locate a copy of the 2009 federal and Georgia tax returns you filed.
2. On your Schedule A federal return, locate line 29 and make a note of the amount there.
3. Open your TurboTax return, then go to the State Taxes tab and open your Georgia return.
4. Follow the instructions below to find amended return.

• For the desktop version, go to the Show Topic List in the top right corner. Select Amended Return.
• For TurboTax Online,  go to Tools, then select Topic List. Under Your Georgia Return, scroll down the list to Miscellaneous and click on the + sign, then open Other Forms You May Need. Select Amended Return, as shown below.

Next you should see a screen that says Change a Previous Georgia Return, as shown below.

1. When asked Do you want to amend a previously filed Georgia return? select Yes.
2. When asked Filing an Amended Return?, select Yes.
3. For Report a Tax Year, enter the year 2009, then select Continue.
4. The screen called About Your Georgia Amended Return appears.
5. Was a federal amended return filed? Check No.  
6. Scroll down to Line 3, Standard or Itemized deductions. Enter the amount you noted from your federal Schedule A line 29 on Line 3, column A (the first column).
7. Find the amount on Line 18 of your original Georgia return and enter that figure on Line 6, column A.
8. Choose the step below that fits your situation:

• If you owed taxes on the Georgia return that you filed, then enter the figure from Line 24 of your original return on Line 10 (Amount paid with original return).
• If you received a refund on the Georgia return that you filed, then enter the figure from Line 25 of your original return on Line 12.

IMPORTANT: You could receive a prompt on a screen called Check This Entry, shown below.

Georgia asks you to calculate the amount of interest you owe on any additional tax you owe and enter it on Line 15.The interest is equal to 1% per month after the April 15 filing date.

If you are unsure what amount to enter, you can skip this step, and let the state of Georgia calculate the interest for you after you submit your amended return. You will still be able to complete your amended return, print and mail it. Should you receive a bill for interest or penalties from the state, those would be covered under the TurboTax Accuracy Guarantee.

1. Scroll down to Part IV, Explanation of Changes.
2. Enter ”Incorrectly included the federal car sales tax deduction in the Georgia Itemized Deductions.”
3. Go to the Print/File tab, shown below, and select Print/Save for Your Records.

1. Select Print Returns.
2. You do not need to print your federal return.
3. On the next screen, shown below, uncheck the box next to From 1040. And make certain that Georgia Individual remains checked.

When printing your amended return, your mailing instructions, including where to mail your return, will print also.

You do not need to attach copies of income statements, for example your W-2 or a 1099 form.

Remember to claim as a deduction any additional tax payments when you complete next year’s return.