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mamadaddypat143
New Member

Medical and Dental Expenses for Alabama return, are Premiums listed in W-2 box DD applicable, read you can deduct 50% of those, but only if you emp has 25 or less emps

 
3 Replies
AnnetteB6
Expert Alumni

Medical and Dental Expenses for Alabama return, are Premiums listed in W-2 box DD applicable, read you can deduct 50% of those, but only if you emp has 25 or less emps

You are partially correct regarding the Alabama deduction for health insurance premiums for small employers.  If qualified, you can deduct 100% of the premiums paid instead of 50%.

 

The following is an excerpt from the AL Instruction Booklet for Individual Income Tax Form 40:  

 

Health Insurance Premium Deduction

 

Alabama resident taxpayers may deduct from Alabama gross income 100 percent of the amounts that they pay as health insurance premiums as part of an employer provided health insurance plan who are employed by an employer that has less than 25 employees and earns no more than $50,000 of wages and reports no more than $75,000 of adjusted gross income on their Alabama individual income tax return or $150,000 if married filing joint.

 

TurboTax will not automatically carry the information entered on your W-2 to the AL return.  You must enter the amount manually.  

 

As you go through the AL return, look for the screen titled 'Let's check for any Alabama deductions'.  Click Start or Update beside Health Insurance Expense and answer the questions in that section to see if you qualify for the deduction.

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hollistree54
Returning Member

Medical and Dental Expenses for Alabama return, are Premiums listed in W-2 box DD applicable, read you can deduct 50% of those, but only if you emp has 25 or less emps

In tax year 2019 and there is a reversal of the Premium Tax Credit from the Affordable Care Act due to income being higher than expected. Turbo Tax sent to the State of Alabama tax return 1) a higher medical expense by including the PTC reversal amount and 2) Federal Income Tax which was increased by the amount of the PTC. State of Alabama Turbo Tax used both of these to calculate Alabama Income Tax. This was an error. Alabama does not allow the PTC reversal to be included in Medical Expenses. 

DavidD66
Expert Alumni

Medical and Dental Expenses for Alabama return, are Premiums listed in W-2 box DD applicable, read you can deduct 50% of those, but only if you emp has 25 or less emps

@mamadaddypat143 No, amounts listed in Box 12 of Form W-2 with code DD signify the total cost of what you and your employer paid for your employer-sponsored health coverage plan.  Code DD amounts are for informational purposes only — they don't affect the numbers in your tax return.  Nevertheless, you should enter the Code DD and the amount of your employer-sponsored health coverage plan if you see it on your W-2.

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