Tax Planner 2020 - Allowable medical deductions calculation needs update

tlbenning

Tax Planner is using 10% of AGI to calculate Allowable Medical Deductions. I don't see a way to change to the current rate of 7.5% nor can I fill in the field manually. Any suggestions?

tlbenning

Went looking. Found a Turbotax item that says it will increase to 10% in 2020. IRS not yet caught up in their Publications, I guess! Thanks very much.

tlbenning

And then several tax advisors say 7.5% was extended to both 2019 and 2020 tax years. So maybe the IRS is right and Turbotax wrong.

Frankx

Interesting - I apparently have an incorrect form. 

Here's the notice from the IRS.gov website:

Public Law 116-94, Division Q, Section 103 changed the medical deduction floor percentage from 10% to 7.5% for 2020. We changed the percentage in the text on line 1 of the Step 4(b)-Deductions Worksheet on page 3 of the 2020 Form W-4 to 7.5%. We also made one minor editorial clarification on line 4 of that worksheet changing "from Schedule 1" to "from Part II of Schedule 1".  The revised form became available on December 31, 2019. You may still use copies of the form printed or downloaded before December 31, 2019, but those forms will have the wrong 10% percentage shown (which only impacts a few people, and the impact is likely to be very small if any and can be mitigated by using the Tax Withholding Estimator after it is updated for this change and/or using the new revision of Form W-4 with the 7.5% amount).

PPL 116-94 became law on 12/20/2019.  You are right - the rate for 2020 is 7.5%.

Frankx

Frankx

Hi @tlbenning.

The 10% rate is correct for 2019 and all following years.  It was lowered to 7.5% only for '17 and '18.

Frankx

tlbenning

My 2019 return shows 7.5% on Schedule A Line 3. What does yours say? IRS Publication 502 says 7.5%. Please provide a link if you have access to newer information.

tlbenning

Went looking. Found a Turbotax item that says it will increase to 10% in 2020. IRS not yet caught up in their Publications, I guess! Thanks very much.

tlbenning

And then several tax advisors say 7.5% was extended to both 2019 and 2020 tax years. So maybe the IRS is right and Turbotax wrong.

Frankx

Interesting - I apparently have an incorrect form. 

Here's the notice from the IRS.gov website:

Public Law 116-94, Division Q, Section 103 changed the medical deduction floor percentage from 10% to 7.5% for 2020. We changed the percentage in the text on line 1 of the Step 4(b)-Deductions Worksheet on page 3 of the 2020 Form W-4 to 7.5%. We also made one minor editorial clarification on line 4 of that worksheet changing "from Schedule 1" to "from Part II of Schedule 1".  The revised form became available on December 31, 2019. You may still use copies of the form printed or downloaded before December 31, 2019, but those forms will have the wrong 10% percentage shown (which only impacts a few people, and the impact is likely to be very small if any and can be mitigated by using the Tax Withholding Estimator after it is updated for this change and/or using the new revision of Form W-4 with the 7.5% amount).

PPL 116-94 became law on 12/20/2019.  You are right - the rate for 2020 is 7.5%.

Frankx