Wife has old IRA - homemaker now. Heavy medical expenses expected next year. Extra 10% penalty or no if we withdrawal from the IRA? Is my salary included w/ her AGI?

[dca5074]

With my salary, bills will be less than the 10% AGI requirement.

[dmertz · Accepted solution]

[Corrected to reflect that the AGI threshold is 7.5% of AGI, not 10%.  Thanks, tbrown21.]

It depends on whether you file jointly or separately.  If you file jointly, the medical-expense penalty exception will not be able to be used if the AGI on your joint tax return will result in the medical expenses being less than 7.5% of AGI.

If you file separately and the medical expenses are allocated to her tax return, there is the potential for the medical expenses to exceed 7.5% of her AGI.  Still, filing separately instead of jointly could cost you more in income taxes than the amount by which the 10% early-distribution penalty might be reduced by filing separately.  If her AGI is particularly low, her standard deduction would effectively be wasted rather than being applicable to your combined income.  Any portion of the medical expenses allocated to her tax return cannot be included on your tax return as an itemized deduction.

Experiment by using the CD/download version of TurboTax to compare filing separately with filing jointly.

[tbrown21]

The medical expense is now 7 1/2%, not 10%

[Critter-3]

That  is immaterial to your bigger issue ... the drawbacks of MFS  ... do some what ifs in the downloaded program  ...

This is my mini version of  a tutorial  that should be in the downloaded program: 

Always remember to shut off the auto update function once you have filed your returns and do not do any updates unless you have safeguarded the PDF & .taxfiles to a removable storage unit for safekeeping.

 

 

What is Forms Mode?

Forms Mode lets you view and make changes to your tax forms "behind the scenes."

If you're adventurous, you can even prepare your return in Forms Mode, but we don't recommend it. You may miss obscure credits and deductions you qualify for, and you may forget to report things that will come back and haunt you later.

Forms Mode is exclusively available in the TurboTax CD/Download software. It is not available in TurboTax Online.

Related Information:

• Why would I use Forms Mode?
• How do I switch to Forms Mode in the TurboTax for Windows software?
• How do I switch to Forms Mode in the TurboTax for Mac software?

If you want to play around with different figures and tax scenarios without affecting your original return you can ….

• >>>In the TurboTax CD/Download software by creating a test copy: 
• 1.  Open your return in TurboTax. 
• 2.  From the File menu, choose Save As. 
• 3.  Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name). 
• 4. Click  Save. You are now safely working in the test copy and anything you do here will not affect the original. 
•  https://ttlc.intuit.com/questions/1900642-how-to-make-a-test-copy-of-your-return

• >>  use the WHAT IF tool: 
• - Click Forms Icon (upper right of screen) or Ctrl 2 (forms view) 
• - Click on the Open Form Icon 
• - In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form 
• - You will see the worksheet on the right side of the screen; enter the information right into the form 
• - To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1

It's always a good idea to make a backup copy of your tax data file, in case your original gets lost or corrupted. Here's how:

1. From the File menu in the upper-left corner of TurboTax, choose Save As (Windows) or Save (Mac).
2. Browse to where you want to save your backup.
   • Tip: If you're saving to a portable device, save it to your computer first to prevent data corruption. Then, after completing Step 4, copy or move the backup file to your device.
3. In the File name field, enter a name that will distinguish it from the original tax file (for example, add "Backup" or "Copy" to the file name)
4. Click Save and then close TurboTax.
5. Restart TurboTax and open the backup copy to make sure it's not corrupted. If you get an error, delete the backup and repeat these steps.

If you make changes to your original tax return file, repeat these steps to ensure your original and backup copies are in-synch.

Related Information:                             

• Retrieve a Tax File from a Portable Device
• What's the difference between the tax data file and the PDF file?

AND save it as a PDF so you have access to a copy even if you don’t have the program still installed and operational :

• How do I save my return as a PDF in the TurboTax software for Windows?
• How do I save my return as a PDF in the TurboTax software for Mac?

AND protect the files :

• How can I protect the tax files on my computer?