On the same page (in Turbo Tax) it also asks for New Jersey Medical insurance premiums included in your NJ wages but not in your federal wages on your W-2, and not deducted on your Federal Schedule A. How can I tell if this field is relevant to my situation?
The $6,589 probably should go in the second box on the Medical Expenses screen in the New Jersey interview. That's the box that says "New Jersey medical insurance premiums included in your New Jersey wages but not in your federal wages on your W-2, and not deducted on Federal Schedule A." That is normally the case in New Jersey. Medical insurance premiums are pretax for federal but after tax for the state, so they can be added to the medical expense deduction on the New Jersey tax return.
If your NJ wages in box 16 of your W-2 are exactly $6,589 more than the federal wages in box 1, then the difference is surely due to the medical insurance premiums and you can enter the amount of the premiums in that second box on the TurboTax screen. If the difference between box 1 and box 16 is not exactly equal to the medical insurance premiums, ask your employer if the premiums were included in box 16 but not in box 1. If so, you can enter them in the second box on the TurboTax screen.
It appears that the difference between box 1 and 16 is exactly $8840 which is Medical ($6589), Dental ($251), and Health Care FSA ($2000). Can all of these expenses be included in the second box on the turbo tax screen "New Jersey medical insurance premiums included in your New Jersey wages but not in your federal wages on your W-2, and not deducted on Federal Schedule A."? Thank you.
You can include the medical and dental insurance premiums. You cannot include the health care FSA. However, you can include medical expenses that were paid from your health care FSA. (You cannot include those expenses in the medical expenses on your federal tax return.)
Just so I completely understand. If I used the whole $2000 of fsa funds (which I did) to pay for medical expenses - i.e, co-pays, prescriptions, etc., then I can add it into the total for the second box?
. . . provided that you paid the medical expenses in 2015. Some FSAs allow you to carry over some of the money to the following year. If you used some of the FSA funds in 2016, that amount would go on your 2016 tax return.
Doesn't TurboTax already include the premiums as deductible, based on having entered the W2 info? (how do I know they haven't been deducted twice?)
@jdevola222 - The medical insurance premiums are not shown on the W-2. They are not included in box 1 on the W-2, but they are not listed anywhere else on the W-2. TurboTax has no way of knowing about amounts that are not included in box 1. There are other things besides medical insurance premiums that can cause a difference between box 1 and box 16, so TurboTax cannot assume that the difference is medical insurance premiums.
TurboTax does not automatically add anything to medical expenses on the NJ tax return. The amount that it initially shows for medical expenses on the NJ return is just the total medical expenses from federal Schedule A.
What if we've payed medical bills which were more than the FSA contribution? Can we add them to Nonreimbursed medical expenses Box 1 in Turbo Tax?
@SweetieJean Thank you. So FSA + Medical and Dental goes into Box 2 (insurance premiums) and other medical expenses over FSA would go into Box 1.. is that right?
medical and dental premiums goes into box 2 and for ALL other unreimbursed and reimbursed FSA medical expenses goes into box 1. Do not count FSA as a medical expense. FSA is just pretax money you set aside to reimburse you for the actual medical expenses you have. If you set aside $2000 but you never had any medical expenses during the year, you can not claim the FSA $2000 in any boxes since you did not have any med expense. If you had $2400 in med expenses then you claim $2400 in box 1 and separately, you submit your med bills to your FSA insurance company and they will reimburse you the $2000 you contributed to your FSA.
The $6,589 probably should go in the second box on the Medical Expenses screen in the New Jersey interview. That's the box that says "New Jersey medical insurance premiums included in your New Jersey wages but not in your federal wages on your W-2, and not deducted on Federal Schedule A." That is normally the case in New Jersey. Medical insurance premiums are pretax for federal but after tax for the state, so they can be added to the medical expense deduction on the New Jersey tax return.
If your NJ wages in box 16 of your W-2 are exactly $6,589 more than the federal wages in box 1, then the difference is surely due to the medical insurance premiums and you can enter the amount of the premiums in that second box on the TurboTax screen. If the difference between box 1 and box 16 is not exactly equal to the medical insurance premiums, ask your employer if the premiums were included in box 16 but not in box 1. If so, you can enter them in the second box on the TurboTax screen.
{withdrawn because rjs' answer is so much more informed than mine]
As per NJ deductions: "You can deduct certain medical expenses that you paid during the year for yourself, your spouse or domestic partner, and your dependents. ... Insurance premiums, including amounts paid under Social Security for Medicare, can be used as medical deductions."
does that mean in addition to pretax Medical, Dental and Vision premiums, we can also deduct medicare premiums (1.45% of social security wages) from NJ taxable income?
When you enter the form 1099-SSA information that includes the deduction for Medicare premiums in the Federal interview that amount transfers over to the NJ return for the medical expenses deduction automatically.
"You can include the medical and dental insurance premiums. You cannot include the health care FSA. However, you can include medical expenses that were paid from your health care FSA. (You cannot include those expenses in the medical expenses on your federal tax return.)"
Can someone confirm that this information is still accurate? (3 years later, law might have changed...)
Also, if possible, some authoritative document or source?
I just talked to someone at the NJ department of taxation. I asked him whether I could count (as "medical expenses" for NJ tax deduction) medical expenses which I paid and then was reimbursed for from my (federal employee) FSA. He thought the answer was no, but seemed unsure, and seemed to be basing this on the fact that the NJ-1040 instructions only mention being able to deduct "unreimbursed medical expenses".
Elsewhere, the NJ department of taxation says:
"Medical Expenses
You can deduct from your gross income certain medical expenses that you paid during the year for yourself, your spouse or domestic partner, and your dependents. However, you cannot deduct expenses for which you were reimbursed. ..."
That seems to agree with the guy saying I can't deduct those expenses. However, I am *GUESSING* this just refers to reimbursement by insurance, etc., not from my own pre-tax money. That said, I'd much prefer to see something authoritative rather than making a large deduction based on a guess.
TIA for any help
You can't claim expenses reimbursed to you from an FSA - you already got a tax deduction for the amount reimbursed from your FSA - that money was removed from your taxable wages on your W-2 (or should have been). Deducting an expense that you already got a tax break on is double-dipping. Deductible medical expenses are those which you paid for with money you paid tax on. Amounts that were removed from your wages for income tax purposes (non-taxable income) cannot be taken as a tax deduction.
If you take a tax deduction for a medical expense and then get reimbursed, you have to claim the reimbursement as income. But if you get reimbursement and did not take a tax deduction, the income is not taxable to you. See Pub 969 - I am guessing NJ has the same rules.
Hang on, though...
I *think* my FSA only shelters me from federal tax. (My W-2 box 16 "state wages" are the same as my gross income.) Assuming that's right, then the medical expenses I'm paying for and getting repaid for out of my FSA are being paid for with money on which I've already paid state tax. ... right? And therefore, if I claim those expenses, I would not be double-dipping. I think?
Correct, money that was taxed and not reimbursed qualifies. Page 22 of the NJ instructions show medical deductions allowed.
@geoffreytevans