Most of my income is from investments. I did some tax-loss harvesting in April to offset LTCG, though your post reminds me that I need to be sure I'm not using more than $3,000 of losses to offset dividend income in periods (a) thru (c).
Going back to how to annualize itemized deductions, I have a few questions:
You said, "You can't employ the 7.5% AGI limitation for medical expenses to justify having an increased medical expense deduction for a given time period for purposes of this form." Why not? Isn't that the point of annualizing? Has the IRS provided guidance on this?
You said, "You will need to divide up your medical expense deductions for each of the time periods based on the total medical expense deduction you got from Schedule A line 4." How? Take the year-end medical deduction and apply the annualization ratios in reverse? If that's the correct way to handle it, then it seems TT would just do the calculation automatically. It also seems to go against the very intent of the form -- calculating tax liability based on factors known at the end of each period. Or are you suggesting something else?
Put another way: on Aug 31 (end of period c) I don't know what my year-end income will be, I don't know what other deductible expenses I may have, etc. So how can it be correct to use a value that isn't known until the end of the year (i.e., Sched A line 4) to calculate tax liability on Aug 31? (It especially doesn't make sense if you think of it from the perspective of using the annualization methodology to make estimated tax payments, but I don't want to get off-track.)
I'm not being argumentative; just trying to understand. Thanks
