AGI for 7.5% medical expense limitation

[RonW]

Perhaps this has been answered before, but why does Lacerte use line 9 of 1040 rather than line 11 on Sch A line 2 in computing 7.5% limitation amount on line 3?

[BobKamman]

Is that true?

I don't use Lacerte but now I'm worried about ProSeries.  My home computer doesn't have the program.  Maybe someone else can check it out.  

[abctax55]

It's NOT considering JUST the $ 300 above the line charitable in pulling over line 11.

Now, whether that's correct or not... no clue.

$300 x 7.5% = $ 23.    Not material in my practice, especially since so few of my clients get their medical deduction.

[RonW]

Exactly right, not taking the $300 charitable in pulling over line 11.  Nothing in the instructions indicates that should be the case so I don't understand why.

Anyway, I agree, not material and non-issue for most of my client base.  

Thanks

[abctax55]

@IntuitAustin 

@IntuitBettyJo 

Houston, we seem to have a problem.  Not a major one, but still an issue.  Thanks

[IntuitBettyJo]

Thanks for bringing this to our attention @abctax55. I will let the team know and update accordingly. -Betty Jo

[BobKamman]

@RonW  "why does Lacerte use line 9 of 1040 rather than line 11"

Line 9 is total income without any adjustments.  Is that what you meant?

[rbynaker · Accepted solution]

What it should be doing is line 9 minus line 10a.  If there's nothing on line 10a then it will look like it's just using line 9.  If you have a case where it's using line 9 without subtracting 10a then you have an "unexpected behavior".

Line 10b and Schedule A never exist in the same universe.  So if you have something on 10b you are not filing Sch A so it doesn't matter how much the medical expenses you're not deducting are being reduced.

Rick

[abctax55]

Jeeze....  didn't see THAT forest for the trees.  Rick, your brain is working way too well for a Sat a.m.

@IntuitAustin @IntuitBettyJo 

OK.... leave the programmers alone so they can focus on the UIC revamp instead.🤣

[IntuitBettyJo]

Will do. Thanks! 

-Betty Jo 

[BobKamman]

May not matter to IRS.  Might make a difference on state returns.  Arizona allows all medical, with no 7.5% reduction.  But it starts with the federal Schedule A (even if not filed) and then adds back in, the disallowed amount.  So it probably comes out right.  Now to check the other 42 states.  

[rbynaker]

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@abctax55 wrote:

Jeeze....  didn't see THAT forest for the trees.  Rick, your brain is working way too well for a Sat a.m.

Nah, I spent half a day banging my head into the wall on this stuff back in December when the draft forms came out.  So I've had time for the wounds to heal.

I have a Recap spreadsheet that mimics the tax return and I've had to do major revisions every year for the last three years because they keep changing the tax forms (and laws).  In my attempt to optimize deductions, I started with all sorts of nested if statements trying to logic my way through this mess and kept running into circular calculation problems.  Then I finally realized all I needed was a subtotal of AGI before the potential charity deduction and then I needed to evaluate [total itemized] vs. [standard plus the lesser of $300 or cash_charity].  It's March already and it seems like I'm still finding at least one bug per week in the spreadsheet.  This week's bug involved the tax calculation for MFS.  Next week's bug will be that it doesn't subtract up to $10.2K of unemployment. 🙂  I suspect I'll need to add another subtotal in the margin somewhere for Section 85 MAGI.  Oh boy!

[RonW]

Yes

[RonW]

I was first alerted to this whole deal by reviewing the allocation of special medical deduction on OR state taxes.  Oregon allows certain medical deduction for older folks even if they don't qualify on fed because of 7.5% limitation.

[pamdory]

I found this on the OR-A last month as it was grabbing this entry from the federal Sch A instead of federal AGI.  I tried Lacerte support twice and couldn't get the issue elevated so I contacted Oregon Dept of Revenue on the practitioner email support and they contacted their Lacerte liaison and got it fixed within 24 hours.  But the federal Sch A is still screwy, but it doesn't matter since as Rick so succinctly put it  "Line 10b and Schedule A never exist in the same universe."

[pamdory]

I also use worksheets I've devised over the years to give me check figures for Federal AGI, Itemized deductions, Federal taxable Income and the same for state.  I know what you mean about their evolution over the last three seasons!  But they are the reason I was able to find this glitch last month.  And despite the time they add to the preparer's time, they significantly reduce my checking time. Not to mention the mistakes they catch.