What is included in "state and local taxes" limit for Schedule A deductions?

Ohhh that makes so much more sense! So basically I paid way more in combined state taxes and property taxes in 2025 than in 2024, but I can only deduct up to $10,000 of it regardless? Does this happen to a lot of people? I bought a house in late 2024 so I'm guessing the property taxes are what pushed me over the limit. Is there anything I can do to get more of this deduction?

Yes, you've got it exactly right! The $10,000 SALT cap affects many homeowners, especially in states with higher income and property taxes. Your property purchase in late 2024 is almost certainly what pushed you over the limit for 2025. Unfortunately, there's not much you can do to get around the $10,000 SALT cap on your federal return. It's a hard limit. However, there are a few things to consider: some states have created workarounds for business owners, and if you're married, you might want to explore if filing separately could help in your specific situation (though this often doesn't help and can cause other limitations). Make sure you're maximizing other available deductions like mortgage interest, which isn't subject to the SALT cap.

Does it work with FreeTax USA exports? Or only with the PDF of the completed return? I'm having similar issues understanding some of the limitations on my itemized deductions.

I'm skeptical about these tax analysis tools. How does it actually find "missed deductions" if you're already using tax software? Doesn't FreeTax USA already check for all possible deductions? And how much does this service cost?

It works with any tax return PDF - so yes, you can use your FreeTax USA completed return. It doesn't matter which tax software you used to create it, as long as you have the final PDF. The main difference is that tax software asks you questions but doesn't always explain the "why" behind limitations or show you alternatives. In my case, FreeTax USA did ask all the right questions, but I didn't understand some of the home office deduction options because I didn't realize they were separate from the SALT limitations. The taxr.ai tool explained how certain business expenses are reported differently than personal deductions, which helped me reorganize some expenses.

How does this actually work? The IRS phone lines are notoriously impossible to get through. Are they using some kind of special access system?

This sounds too good to be true. I've tried calling the IRS countless times and can never get through. Why would some service be able to get priority access? I'm pretty sure the IRS phone system doesn't allow for "cutting in line.

It uses an automated system that navigates the IRS phone tree and waits on hold for you. When they finally get through to a human, you get a call back and are connected directly with the IRS agent. There's no special access or cutting in line - they're just using technology to handle the painful waiting process. The reason it works is that they have systems continuously trying to get through during optimal times, and once someone gets a spot in the queue, you get that spot. It's basically like having someone wait on hold for you, but with smart tech doing it instead.

That's really interesting about filing separately! My partner and I are planning to get married later this year - would this strategy potentially help us since we both own property? Are there big downsides to filing separately I should know about?

Filing separately can help in your situation since you both own property, but there are significant potential downsides. You'll lose several tax benefits when filing separately, including: reduced student loan interest deductions, limited IRA contribution deductions, no education credits, reduced capital loss deductions, and potentially higher tax rates. You need to run the numbers both ways before deciding. The benefit of getting $20,000 in SALT deductions ($10,000 each) versus $10,000 jointly needs to outweigh what you'd lose from those other benefits. Also, some states require you to file the same way on state returns as federal, which could eliminate any advantage if your state has higher taxes when filing separately.

Tax software can sometimes display information confusingly. What might be happening is one screen is showing your total SALT taxes (before the cap) while another is showing what's actually being deducted after applying the $10,000 limit. Or there could be business/rental property taxes in one total that aren't subject to the cap.

Check if some of your property taxes are for a rental property or business. Those would be reported on Schedule E or Schedule C, not Schedule A, and aren't subject to the $10,000 SALT cap. The software might be calculating correctly but displaying the information in a confusing way.

This is really helpful context! I hadn't thought about the timing aspect with the property tax proration at closing. When I bought my house in December 2024, there were some property tax adjustments on the closing statement - should I be looking at what I actually paid to the county versus what was shown on the closing docs? Also, it's good to know the SALT cap might expire after 2025. Do you know if there's any indication from Congress about whether they'll extend it or let it expire? This would make a huge difference for my tax planning going forward, especially since I'm probably going to be hitting this cap every year now as a homeowner.

For the property tax proration question - you should deduct what you actually paid to the taxing authority (county/municipality), not what appeared as adjustments on your closing statement. At closing, you and the seller typically split the annual property tax bill based on how many days each of you owned the property that year. The closing statement shows this proration, but only the amounts you actually paid to the tax collector are deductible. As for the SALT cap expiration, Congress hasn't made any definitive moves yet, but there's been discussion from both parties about addressing it. Some want to eliminate the cap entirely, others want to raise it, and some want to extend it as-is. With it expiring after 2025, we'll likely see more concrete proposals as we get closer to the deadline. For planning purposes, I'd prepare for both scenarios - having the cap continue and having it expire - since the political winds can change quickly on tax policy.