18449: Difference in Deductions on State Comparison ([ST]-COMP) (Drake23)

Why is there a “Difference” for “Deductions” on the Three-year State Tax Return Comparison ([ST]-COMP)? (Drake23)

The method for calculating “Deductions” on state Tax Return Comparisons changed between Drake Tax 2022 and Drake Tax 2023. While the amount of other deductions for both years is correct, the calculation change makes the “Difference” column for “Deductions” look different than in years prior.

Beginning with Drake Tax 2023, the “Deductions” line on the state comparison is considered other deductions and is computed as follows:

    Total State Deductions – Applicable “Standard Deduction” or “Itemized Deduction”

In Drake Tax 2022 and prior, the “Deductions” row is considered total deductions and is computed as follows:

    Other State Deductions + Applicable “Standard Deduction” or “Itemized Deduction”

As an example, the following taxpayer took the standard CA deduction in 2021 and 2022. In Drake Tax 2022, an amount was always shown on the “Deductions” line, because the “Deductions” line represented total deductions.

    $0 in other deductions + Applicable “Standard Deduction” of $10,404 = Total state deductions of $10,404

The difference line would be a result of the difference of total deductions between tax years 2022 and 2021
($10,404 – $9,606 = $798).

In Drake Tax 2023, there is not an amount on the “Deductions” line if there were no deductions apart from the standard deduction or itemized deductions, because the “Deductions” line represents other deductions.

    $10,726 in total state deductions – Applicable “Standard Deduction” of $10,726 = Other deductions of $0

Thus, there is a difference of $10,404 shown on the state tax comparison for 2023 and 2022 ($0 – $10,404 = - $10,404).

To use the new calculation method, so as to show no “Difference” in the “Deductions” row for 2021, 2022, and 2023:

1. In data entry, open the applicable state COMP screen.
2. In the 2021 column, for Deductions, subtract the 2021 applied “Standard Deduction” or “Itemized Deduction” from the total “Deductions” as seen on the worksheet, and enter the result. (For taxpayers taking the standard deduction, this amount is $0.)
3. In the 2022 column, for Deductions, subtract the 2022 applied “Standard Deduction” or “Itemized Deduction” from the total “Deductions” as seen on the worksheet, and enter the result. (For taxpayers taking the standard deduction, this amount is $0.)
4. Recalcuate and view the return to see the expected difference in other deductions—usually $0.

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The new calculation method will be used in future Drake Tax years. No manual adjustments are needed when updating the 2023 return to Drake Tax 2024.