NJ Medical Expense

[CNOakland]

Turbotax Premiere Online 2022

I'm taking the standard deduction on Federal return but entered all my unreimbursed medical expenses on the Federal interview pages as well as the ACA premium subsidies on form 1095-A. The numbers for medical expenses on Federal are all correct but the amounts carried forward to NJ state return, specifically, the amount on Worksheet F, doesn't look correct. I tried all sorts of calculations based on the data I entered in Federal hoping to get the same number the state return is giving me but no success. Is this a TT bug or is there something I'm missing? 

[MonikaK1]

If you entered any medical expenses in the federal interview, they will flow to your New Jersey tax return, even if you don't use itemized deductions on your federal tax return. The TurboTax interview for New Jersey will ask you if you have medical expenses that you did not enter in the federal interview, or if you want to review the medical expenses that flowed from the federal return. Enter the full amount you paid that was not reimbursed by insurance. TurboTax will subtract 2% of your New Jersey gross income.

On your New Jersey state return, 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. Only expenses that exceed 2% of your income can be deducted.

See here for more information from the State of New Jersey on this topic.

See this thread for further discussion on this topic.

[CNOakland]

Thank you MonikaK1 for your reply. Just to clarify further, I entered a total of $4853 of unreimbursed medical expenses in the Federal interview screens (prescription, labs, doctor fees) but Turbo Tax carries over the amount of $3732 to the NJ medical expenses page. Is there a reason why it does not bring over the $4853? As a result, in Worksheet F, it calculates the allowable NJ medical deduction by applying the 2% on $3732 (incorrect) instead of $4853 (correct). I understand that I can just make the correction on the NJ page but is there a reason why the amount carried to NJ does not match the amount I entered in Federal?

[KrisD15]

To clarify, when you entered the medical expenses, was there also an amount for health insurance premiums you paid out-of-pocket? 

After entering the 1095-A, did you get a credit which would have reduced the deductible medical expense amount? 

[CNOakland]

Hello KrisD15,

Thanks for the follow up. I did not enter the ACA premiums in the Federal medical expense interview pages but I did enter all data from 1095-A when prompted. TurboTax correctly calculated the credit and added the proper premium amount to the total medical expense which correctly shows $8443 (sum of $4853 actual expenses + ACA premiums not covered by subsidy). That part all looks correct. My confusion is the amount $3732 that comes over to the NJ return. How is TT coming up with that number? I would guess that it should at least be $4853 and then I can adjust it to add back the ACA premiums I actually paid (after TT has calculated the proper credit I'm eligible for based on my actual calculated AGI).

[GeorgeM777]

TurboTax should calculate 2% of your New Jersey AGI, and then any amount of your medical expenses over 2% of your NJ AGI will be deductible on your NJ return. 

@CNOakland

[CNOakland]

Hello GeorgeM777,

Thanks for your reply. I perfectly understand the 2% of AGI rule for NJ medical deductions. However, that still does not explain why TT carried forward what looks like a random amount on which this 2% rule should be applied. In my case, TT carried forward $3723 and then applied the 2% rule and allowed a medical deduction of $2843 which is overly understated. Where did TT get $3723? 

[ErnieS0]

As other tax experts have said, TurboTax will carry over medical expenses entered in the federal medical section, whether you itemized on federal or not.

New Jersey does have an exception. For federal purposes you may be able to deduct amounts paid for health insurance for any child of yours who was under age 27 at the end of 2022. However, for New Jersey purposes
you can deduct these amounts only if the child was your dependent.

As a workaround your can deduct the difference in the New Jersey section of TurboTax. 

• On the screen "Any Medical Expenses?" tap YES
• On the screen "Medical Expneses" enter the difference

Numbers entered here will not transfer backwards to federal so they will not impact your federal return.

[CNOakland]

Thanks ErnieS0. I wanted to understand how TT figured out the amount to carry over to NJ because it was not what I was expecting. My case is quite straightforward, just medical expenses for my husband and myself, no dependents, just the regular doctor, dentist, labs, prescription meds and ACA unsubsidized premiums, so I really don't know where TT is getting that incorrect amount from. But like you said, I will just "work around" the problem instead of figuring it out and enjoining tax experts figure out what may very well be a TT software issue. Thanks to all who helped and provided input!

[MarilynG1]

Testing this, the same amount on Federal Schedule A for Medical Expenses carried over to the New Jersey Medical Expenses Worksheet.  You may want to delete/re-enter your expenses or Contact Support for more assistance. 

[CNOakland]

Hello MarilynG1,

Thanks for your input. It does appear to be a problem with TurboTax. I also did some tests - removed and re-entered medical expenses in Federal interview, removed all amounts altogether, entered different made up amounts, and all scenarios using different amounts yielded the exact same (incorrect) amount of $3732 in NJ!

It might be that your own test worked because your case actually uses the itemized deduction while my return uses the standard and doesn't even create a Schedule A. 

At this point, I don't think I'll even bother reporting this issue to TT support. I think I will proceed with the workaround previously suggested to override the incorrect amount in the NJ interview page. Maybe after filing my returns, I may contact support so that next year's edition will be free of this issue.

Thanks very much to all who helped! 

[ErnieS0]

I ran the number you provided ($4,853) in TurboTax, which was not enough to itemize, and the number transferred correctly to New Jersey in every case, even when entering the number in different medical expense categories.

If you are using the online program (and haven't paid yet), you can delete your state return and add it back in. TurboTax will do a fresh transfer of data.

[CNOakland]

Hello ErnieS0,

Thanks for running tests yourself. I have not filed my returns but have paid for the online Premiere version. I'm not sure why my version appears to be behaving differently from what the experts here have been using but I think it will take more work to redo the state return than simply override the amount. I'll go with that for now and look out for it next year.

Thank you to all the experts who have diligently been helping me, I appreciate all your help!