My federal tax return was rejected with this code: ScheduleA_Medical_Expenses_Hold_Rule. We had a lot of medical expenses in 2020. How do I fix this?

[acjohnson72]

Description of error:
Your federal return was rejected due to an issue with Medical Expenses on Schedule A: Itemized Deductions.
What needs to be done:
ACTION NEEDED: Important Information About Your Federal Tax Return Updates to the Medical Expense Worksheet are estimated to be completed by 4/30/21. What do I do now? If you're using a CD or downloaded version of TurboTax: When these updates are completed, update TurboTax (visit our Support Site if you need help updating) Please review your answers under the topic of the Medical Expenses in the Deduction & Credits Section. Make any corrections if prompted E-file your return (you won't be charged for e-filing) If you're using the online version: When these updates are completed, log into your TurboTax Online account Please review your answers under the topic of the Medical Expenses in the Deduction & Credits Section. Make any corrections if prompted E-file your return (you won't be charged) We apologize for any inconvenience. Thank you for using TurboTax!

[AnnetteB6 · Accepted solution]

Based on the information you shared, TurboTax is being updated to handle some of the recent changes due to the American Rescue Plan that have affected the medical expense deduction.  These changes are expected to be completed by April 30, 2021.  

To electronically file your return, you will need to refile after that date.  Your return will not be late even though that date is after the typical April 15th tax deadline.  The deadline for 2020 tax returns was extended to May 17, 2021.  

@acjohnson72

[acjohnson72]

Thank you @AnnetteB6.  I thought that was possibly the case but I wasn't sure.  This is very helpful. 

[FD13]

I just received this rejection code today for the same reasons (Medical Expense deductions on Schedule A)

But My message from TurboTax as of 04/14/2021 12 Noon, said that the updates to TurboTax will be ready on April 16th and then you can update the software and to go through the new interview questions and re-file.

Question: Will the update really be ready in a few days? or the end of April as previously stated?

[debussy101]

My federal taxes also were just rejected with the exact same message about an April 16 update. Hey, TurboTax, which date is correct?

[Beroli]

My return was rejected for this same reason.  I am also seeing the April 16 date.  My confusion is why is TurboTax evening letting us submit a return with a Schedule A Medical Expense when they know they are in process of updating the form?  I realize that there are a lot of last minute IRS and State Tax changes this year, but honestly, I am a 26 year TurboTax user, and I have never been more frustrated or more disappointed than this year.  I reported two errors with the Maryland software which are still not corrected.  I had to file my Maryland return outside of TurboTax after paying to use TurboTax Maryland.

[ChondelLO]

Please see previous response from AnnetteB6.

Schedule A rejection

[Beroli]

I know what I need to do.  That is abundantly clear.  I only commented to add that I am also seeing April 16 instead of April 30 and to reinforce to TurboTax that this has been a very disappointing year for their software.  This is just one more example of how they have failed us.

[debussy101]

Yes, those of us who've read this thread KNOW what needs to happen. The question is WHEN will it occur on your end? You didn't address that timeframe: April 16 or April 30? And exactly WHY did TurboTax allow us to file if the software wasn't properly updated? I waited more than a month after entering my data to see the updates and only filed once it appeared that those had been executed. Clearly, they weren't. I've used TurboTax for the last 25 years and have NEVER had such issues. TurboTax: you DO need to address these shortcomings with your clientelle rather than let your online handlers give snarky "see previous answer" retorts!

[carolinagalredux12345]

I also received the memo with instructions to refile on or after April 16.  I also am very disappointed with Turbotax since I also waited several months to file (to ensure no glitches).  

[FD13]

To the TurboTax Expert team......

Please clarify why there is conflicting information on the next software update timing.

AND also

Please explain what the "IRS Schedule A Deduction Medical Expense Hold Rule" is and what it means to all of us impacted by this issue???

[bjc217]

I got the same rejection error but mine says April 16th.  Looking forward to finding out if it is the 16th or 30th or does it depend on what form is being updated? 

[SweetieJean]

Please understand that some states are still (in April of 2021) changing their tax laws retroactive to 2020.  When they do, they must then issue guidelines. TT must program and test these guidelines, and then get the state to approve them. 

Likewise, the IRS is still issuing decrees, such as this one:

IRS suspends requirement to repay excess advance payments of the 2020 Premium Tax Credit; those clai...

[Beroli]

So now I am even more confused.  I got an update to my TurboTax software this morning.  Is this the April 16/April 30 update or are we still waiting for more updates on this medical expense issue? 

I am also confused by how TurboTax implemented the Relief Act change of not requiring repayment of APTC (Advanced Premium Tax Credit) for 2020.  The update is counting any overpayment of APTC as reimbursed medical expense on line 2b of the Medical Expenses Worksheet which ends up with a lower amount of medical expense on Schedule A Line 1 by the amount of the excess APTC. 

While this does appear to comply with the instructions for Schedule A (Pub 502 - "You can't include in medical expenses the amount of health insurance premiums paid by or through the premium tax credit. You also can't include in medical expenses any amount of advance payments of the premium tax credit made that you did not have to pay back."), it does not seem consistent with the IRS decree referenced above which says that if someone has already filed a return before this decree on APTC that the IRS will remove any amount from 1040 Schedule 2, Line 2 ("The IRS will reduce the excess advance Premium Tax Credit repayment amount the taxpayer reported on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, and Line 29 of Form 8962 to zero and process their return. There is no need to contact the IRS. If a taxpayer receives a IRS letter about excess APTC for tax year 2020, they should disregard the letter.")  It mentions nothing about them adjusting Schedule A. 

Based on my reading of these various components, it looks like I would have been better off filing my return before any of these updates were made by TurboTax and then waiting for the IRS to send me a check for my overpayment of APTC.  

I know that this has been a difficult year due to the last minute and retroactive tax code changes, but honestly, I am about ready to give up.