Itemized Deduction Credit Errors

​​​The department recently identified that the Wisconsin itemized deduction credit was computed incorrectly on certain 2013 Wisconsin income tax returns by certain tax preparation software.

Taxpayers with incomes over a certain threshold are subject to limitations of federal itemized deductions for 2013. The limitation applies for Wisconsin if:

  • Your income was over $300,000 if married filing joint; $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately, and
  • You claimed interest expenses and/or gifts to charity for the Wisconsin itemized deduction credit

If your income was above these thresholds, the interest expenses and gifts to charity otherwise includable in the credit are reduced by the lesser of:

  • 3% of the excess of adjusted gross income (AGI) over a certain amount, or
  • 80% of the amount otherwise allowable

There is an article on the department's website with worksheets that assist in computing the allowable itemized deductions for Wisconsin purposes.

Beginning July 15, 2014, the department will correct returns with this error and send a Notice of Amount Due.* You do not need to send an amended return for this error. Interest and penalties will not be assessed as long as the bill is paid on or before the due date of the Notice of Amount Due since the IRS instructions were not available in time for the department to provide additional guidance on the topic in the Form 1 income tax booklet instructions.

* If you had a refund that you asked to be carried forward to the 2014 tax year, and the department uses the carryforward to pay the additional amount of tax due on your 2013 return, you will be notified that you should make additional estimated payments for 2014 in order to avoid potential underpayment interest.

July 8, 2014

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