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VA Form 760CG Adjustment for Federal Schedule A Deduction - Medical Expenses


VA Form 760CG Adjustment for Federal Schedule A Deduction - Medical Expenses

VA is not adjusting the Federal Schedule A Medical Deductions on Schedule ADJ. VA should be adjusting this deduction from 10% to 7.5%.The full amount is reported on page 1, line 10.

Virginias Fixed Date Conformity with the Internal Revenue Code Taxable Year 2017 ".While Virginia will continue to allow the federal itemized deduction for medical expenses, Virginia will not conform to the TCJA provision that temporarily increases the medical expenses deduction. The TCJA lowers the percentage used to compute the deduction floor from 10% to 7.5% of federal adjusted gross income.As a result, taxpayers claiming a medical expenses deduction will be required to report an addition on the Virginia return that is equal to the difference between the amount of the medical expenses deduction reported on their federal income tax return and the amount computed using a deduction floor equal to 10% of federal adjusted gross income. This addition must be reported on Line 2b of Virginia Schedule ADJ, Schedule 760PY ADJ or Schedule 763 ADJ using addition code 99. See the worksheet below to compute the Virginia medical expenses addition…(worksheet image)…Taxpayers should consult the instruction booklets to determine whether they are required to make any fixed date conformity adjustments on their Virginia return. After consulting the instruction booklets, many taxpayers will find that they do not have any fixed date conformity adjustments, and those taxpayers should enter 0 in Line 3 above. For those taxpayers required to make fixed date conformity modifications, they should enter the net amount of the modifications in Line 3 above. They should also use 7.5% as the multiplier on Line 8 of the FDC worksheet in the instruction booklet. Refer to Tax Bulletin 18-1 for more information on this legislation.

The program is not adjusting differences automatically due to the recent changes in requirements provided by the state. Lacerte will be updated to reflect these changes in a future release.

Until these changes are made;

  1. Go to Screen 51.171, Virginia Modifications.
  2. Within the Virginia Additions section, enter the difference in Other additions (99) (Ctrl+E) (TP code 2 / SP code 22)

This amount will flow to VA Form 760CG, page 3, line 2b to increase the amount of Federal AGI reported on page 1.

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