In my 2019 tax return I will have a Lifetime Care Advance Payment. Will Turbo Tax guide me through the process entering this 1040 Itemized Medical expense?

[DoninGA]

IRS Publication 502 Medical and Dental Expenses page 10 - https://www.irs.gov/pub/irs-pdf/p502.pdf#page=10

Lifetime Care—Advance Payments

You can include in medical expenses a part of a life-care fee or "founder's fee" you pay either monthly or as a lump sum under an agreement with a retirement home. The part of the payment you include is the amount properly allocable to medical care. The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. You can use a statement from the retirement home to prove the amount properly allocable to medical care. The statement must be based either on the home's prior experience or on information from a comparable home.

Health care insurance premiums and other medical expenses that you paid with out of pocket funds are an eligible medical expense that you can deduct using Schedule A for itemized deductions. However, only your total medical expenses that are greater than 7.5% (2019) of your Adjusted Gross Income (AGI) can be deducted. Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2019

Single - $12,200 add $1,650 if age 65 or older
Married Filing Separately - $12,200 add $1,300 if age 65 or older
Married Filing Jointly - $24,400 add $1,300 for each spouse age 65 or older
Head of Household - $18,350 add $1,650 if age 65 or older

Enter medical expenses, sch a in the Search box located in the upper right of the program screen.  Click on the Magnifying Glass.  Click on Jump to medical expenses, sch a

[rondupas]

Thank you.

[GeoffMather]

I have the same question for tax year 2020.   I have a large one time Membership payment that is for "Lifetime Care - Advance Payments" as defined in IRS Pub 502.   I know this is unusual and perhaps I just can't use TurboTax this year.   There is no question that covers this under Medical expense deductions.   Can I somehow force entries into 1040 schedule A, overriding the system?   This is NOT regular Long Term Care insurance.    This is an advance payment in return for a contractual obligation to pay our medical expenses for life.

     In your answer below, you have identified the right item, but your hint about the search function seems to just bring me back to the standard questions.  What question can I used to input the amount I paid?    It is not one of your usual items.

[DoninGA]

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@GeoffMather wrote:

I have the same question for tax year 2020.   I have a large one time Membership payment that is for "Lifetime Care - Advance Payments" as defined in IRS Pub 502.   I know this is unusual and perhaps I just can't use TurboTax this year.   There is no question that covers this under Medical expense deductions.   Can I somehow force entries into 1040 schedule A, overriding the system?   This is NOT regular Long Term Care insurance.    This is an advance payment in return for a contractual obligation to pay our medical expenses for life.

     In your answer below, you have identified the right item, but your hint about the search function seems to just bring me back to the standard questions.  What question can I used to input the amount I paid?    It is not one of your usual items.

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Enter medical expenses, sch a in the Search box located in the upper right of the program screen. Click on Jump to medical expenses, sch a

Continue through the screens for medical expenses until you land on Tell us about any other medical expenses.  Enter a Description and an Amount for the medical portion of the Advance Payment.

That amount will be included as part of your total medical expenses paid with out of pocket funds in 2020 on Schedule A.

However, only your total medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI) can be deducted.  Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2020

• Single - $12,400 add $1,650 if age 65 or older
• Married Filing Separately - $12,400 add $1,300 if age 65 or older
• Married Filing Jointly - $24,800 add $1,300 for each spouse age 65 or older
• Head of Household - $18,650 add $1,650 if age 65 or older

[GeoffMather]

That sounds reasonable, but something isn't working (maybe "yet"?)     I can put in over $100,000 in this category and still TurboTax says it will choose the standard deduction for me.    Looks like I will have to do my taxes by hand this year, if TurboTax seems to ignore my number.    The 7.5% number is about $12k to @$15k.

       Can you explain why such a large number is ignored.

[DoninGA]

@GeoffMather I just ran a test using $100,000 as a medical expense with both the TurboTax desktop editions and the TurboTax online editions.  It each case after completing the Deductions and Credits section of the program Itemized Deductions was shown as best for me.

Make sure that you have gone through the Wages & Income section and then complete the Deductions & Credits section. 

Also, if you are using the desktop edition make sure that you are at the latest release.  Click on Online at the top of the desktop program screen, click on Check for updates.

[GeoffMather]

OK. I think we’ve found the problem.  You must be using some complete test data.  I am trying to do 2020 planning and it won’t let be put in income numbers.  
      Is there a way to force in some estimates so I can use it for planning purposes?

     Thanks for sticking with me. 

[DoninGA]

The Retirement income section is one of the sections not yet available.

If you are using the TurboTax desktop editions you can enter retirement income on Form 1099-R by using Forms mode and then selecting a Form 1099-R to enter the income.  Click on Forms and when in Forms mode click on Open Form in the upper left.  Type in 1099-R and open the form.

Or if using the TurboTax online editions enter retirement income on a W-2  in the Wages & Income section just to get the income into the program.  Delete the W-2 when the Form 1099-R becomes available.

For investments you will have to wait as there are to many variables to try and enter anywhere else in the program.