Is TurboTax 2017 erroneously permitting medical expense deductions over 7.5% of AGI (not 10% of AGI) if over age 65?. Did this 7.5% exception not end on 12/31/2016?

[Jimi1970]

On 11/17/17 I downloaded TurboTax Deluxe as available at that time.  In preparing a preliminary return (strictly for year-end estimating purposes), TurboTax used the 7.5% threshold in calculating Schedule A.  The " .... was born before January 2, 1952" box on Schedule A was not checked, and both my and my spouse's birthdates are entered correctly in TurboTax's personal info.  (Both birthdates after January 1, 1952).

[macuser_22 · Accepted solution]

TurboTax cannot make any form changes on it's own.  The IRS supplies the electronic form specifications that all tax software vendors must adhere to.   The IRS efile specification usually follows the paper form publication by a week or so,   As of now, the latest 1040 Schedule A published by the IRS is the 2016 version.   Until the IRS publishes the 2017 version, and the instructions, TurboTax cannot make these changes.  (Sometimes when there is pending tax law legislation in Congress that could affect certain forms, the IRS holds off until after the law is changed.)

[TaxGuyBill]

TurboTax certainly can change the calculations and modify the forms (just not as 'final' forms).  Other software does that.

The IRS released the "draft" version in July, and the main purpose of the "draft" version is so software companies can start programming the cosmetic changes in the form.  The actual calculations are not dependent on the cosmetics of the forms, and the calculation information is usually available long before the "draft" forms (in this case, the law was written in 2010).

[Critter]

Just because they can doesn't mean they do ... the Sch A is usually not operational until sometime in January.  For the users who insist that TT puts out a provisional beta program early have to understand it is just that ... an unfinished version.  Even my professional program that is released early December comes with the note  that it is not a fully operational program.

[TaxGuyBill]

I agree, it is essentially the 2016 software until mid-December, and then the 'bugs' often make it unreliable until mid-January.

[Critter]

FYI ... the 2017 program is not fully operational and will not be until sometime in January or February so until then there will be many glitches that updates will fix. Watch the charts when they are working for when the Sch A is available ...

Availability chart for the 2017 PERSONAL programs:
https://ttlc.intuit.com/questions/1908854-forms-availability-table-for-turbotax-federal-products-exc...

Availability chart for the 2017 State programs for the Personal returns:
https://ttlc.intuit.com/questions/1908857-forms-availability-table-for-turbotax-state-except-busines...

[rlinsker]

Re: the 7.5% medical deduction threshold: When the *2016* Turbotax was released, it was established law that the 7.5% threshold for over-65s would change to 10% effective Jan 1, 2017. I am over 65. Yet, when I use the estimated tax worksheet in 2016 Turbotax to estimate my 2017 taxes, it applies the 7.5% -- not the correct 10% -- threshold. This seems to be an error in Turbotax 2016 -- i.e., contrary to law at the time the 2016 program was released (and not corrected in later updates up to now).

[xmasbaby0]

The forms will be updated later in the filing season.  There is still pending tax legislation.  When the IRS updates the forms, TurboTax will be able to update them.  Since it is far too early to file, you will need to be patient.

[macuser_22]

The IRS has not finalized the 2017 1040 Schedule A yet - they still show the 2016 version as the latest version.    
There are still several tax extender bills before Congress that they have not acted on yet that could affect the final version of the form.

Congress has until Dec 31 to change the tax law.   Here is the summary of a bill that does exactly that. I doubt that the IRS will finalize the form until they know the answer.

S.1977 — 115th Congress (2017-2018)
Introduced in Senate (10/18/2017)

Seniors Tax Hike Prevention Act of 2017

This bill amends the Internal Revenue Code (IRC) to extend, through 2019, the rule that permits individuals who are 65 and older to deduct certain medical expenses that exceed 7.5% of adjusted gross income. (A provision that reduced the 10% threshold for the medical expense deduction to 7.5% if a taxpayer or a taxpayer's spouse is 65 or older expired at the end of 2016.)

The bill also expresses the sense of the Senate that the reduction in revenues resulting from this bill should be offset by an appropriate amendment to the IRC.

[dmertz]

My testing of the What-If Worksheet in 2016 TurboTax shows it to be working correctly with regard to using 10% of AGI for 2017 for those age 65 or older in 2017.  Make sure that you have the latest updates to 2016 TurboTax and that you have marked the box to use 2017 tax rates for the particular column you are using for the 2017 estimate.