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Message from New Mexico: PIT-1 Itemized State and Local Tax Deduction

04 Mar 19
Craig Smith
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Software vendors received the below messaging from New Mexico. The update has been made to the NM software and assuming the update passes internal testing, should be deployed live on the morning of Wednesday, March 6th. This update by NM would potentially only benefit NM taxpayers itemizing deductions on the state return with add-backs. Any NM returns filed prior to this update going live that would benefit from this update can file an amended NM return.

Re: Error in the add-back calculation for PIT-1, Line 10, Itemized State and Local Tax Deduction.

The New Mexico Personal Income Tax instructions provide a worksheet on page 22 to assist taxpayers in how to calculate the add-back amount that goes on line 10 of the PIT-1. This worksheet does not result in the correct add-back amount for the 2018 tax year due to changes made by the Federal Tax Cuts and Jobs Act of 2017 (TCJA), and may result in adding back more state and local taxes than a taxpayer was able to include in their itemized deductions.

The workgroup assigned to address and correct this error have come to a resolution and agreed to issue bulletin B-300.18 Guidance on State and Local Add-Back. A new Worksheet for Computing the Amount on Line 10 of the PIT-1 Return is included in this bulletin.

Taxpayers who have already filed and found that their add-back amount was adversely affected by the current instructions have the option of filing an amended return using the new worksheet. Taxpayers may amend their return using Form PIT-X.

The 2018 PIT-1 Instructions (page 22) have also been updated with a message to access the bulletin for the new worksheet once the bulletin is publicly posted.

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