CCRC Entry fee Medical Deduction

[deluciavj]

This year I bought into CCRC in 2023.  I expect to get documentation early next year that will tell me what I can deduct for medical.  I expect this will allow me to itemize in 2023.  Does this make sense?  If so, can I itemize for all items?  Additional medical expense like prescription drugs?  Donations?  Are there any other deductions I should consider this year since I can itemize?  I would like to donate a car vs selling.  Does this make sense?  Sorry for the mind dump.

[ClarissaA]

Thanks for joining us today deluciavj!   

When it comes to deductions - you can either take the standard deduction, or you can itemize your deductions.  In order for itemizing to be beneficial, the total of all your eligible itemized deductions needs to exceed your standard deduction.   The underlying concept is that the standard deduction gives you what you need, unless you have really high deductions in certain areas.   

Medical expenses are only one component of itemized deductions.  When combined with other deductions, if the total exceeds the standard deduction, itemizing saves you money on your taxes. 

2023 Standard Deduction

If you are single, the standard deduction is $13,850. 

If you are single and over age 65 or blind, that increases to $15,700.

If you are single, over age 65, AND blind, the standard deduction is $17,550

Since you didn't mention if you were single or married, I'm going to assume you are single for the rest of my answer.  

The CCRC entry fee is absolutely going to help increase your medical expenses for the year - it is treated as a prepayment of future medical expenses and it is deductible in the year you paid it.  You will also add all your other medical expenses for 2023 to this amount - prescriptions, office visit co-pays, glasses, dental work.  You will want to gather all of them. 

The next component to consider for your itemized deductions is state and local taxes - these are capped at $10,000, and can include income taxes or sales taxes paid, as well as real estate and personal property taxes. 

If you owned your home and paid mortgage interest in 2023, that will also be a deduction to add to the Schedule A (where you list all your eligible deductions and calculate the total - don't worry, TurboTax will do it for you when you prepare your return!)

Charitable donations are also deductible.  Donating a car will generate a write off for the deduction - but be sure to keep all the paperwork.  The IRS will limit your deduction to what the charity sells the vehicle for in most cases.  https://www.irs.gov/charities-non-profits/charitable-organizations/irs-guidance-explains-rules-for-v...

Assuming you are single, and over age 65, you will need to exceed $15,700 in deductions to take advantage of the itemized deductions.  

[deluciavj]

Thanks for responding.  I am over 65 and married filing jointly.  What is the impact?

[ClarissaA]

Thank you for the additional details.  I've added the standard deduction information for Married Filing Joint for 2023 for you to review.  The concept is the same as if you are single -  when you add all the eligible expenses for your itemized deductions together, if the total is more than your standard deduction, you will benefit from itemizing.  

2023 Standard Deduction 

Married Filing Jointly - $27,700

Married Filing Jointly, one spouse is age 65 or older - $29,200

Married Filing Jointly, both spouses are age 65 or older - $30,700

Add an additional $1500 to the standard deduction for each individual who is also blind.  

[deluciavj]

Thanks for the additional details.  My taxes will be a bit more complicated this year than normal.  Along with buying into CCRC, I have also moved to another state.  I will be filing Federal, VA and SC income taxes.  I have used TurboTax online in the past.  Would this be a year to work with a tax expert vs online?  Can TurboTax help in this area?

[Sean Enrolled Agent]

Hello deluciavj,

If you feel that your taxes will be a bit more complicated this year, with two states and your federal return, then yes, working with a tax expert may be the route you want to go.

With TurboTax Live, you have unlimited access to help including from credentialed tax experts. You can contact us as many times as you need to confidently file your return. You will also be given the option for a targeted review of your tax return when you are finished prior to e-filing.

Our full service option is the way to go if you are thinking that you just want someone else to complete the tax return for you. You can let a tax expert do taxes for you, from start to finish! 

Thanks,
Sean