Probable Error in Turbo Tax Software
The problem I’m having is with the Long Term Care deduction on the NY state return. NY gives a tax credit of 20% of the premiums paid for long term care. NY also requires you to compute the itemized Federal deductions even if you take the Federal Standard deduction. They use the Federal itemized deductions as the basis to compute the NY state deduction. You then add or subtract various items to finalize your state deduction. For example, you can claim a deduction for your NY state income taxes on your Federal return but this deduction is not allowed on your state return. Therefore you must subtract it from the Federal itemized deductions.
Likewise, since NY gives you a credit for 20% of your Long Term Care premiums, they want you to remove your Long Term Care deduction from the Federal itemized medical deduction. You do this on NY Form IT-196. Federal medical deductions are generally very low since you have to subtract 10% of your AGI from what you spent which generally leaves zero or close to it. In my case, my Federal medical deduction was $725. You then have to compute what percent of the $725 deduction was due to the Long Term Care. In my case, the percent was 16.42. When you multiply this percent times $725, you see that the effect of my Long Term premiums was only $119. Yet Turbo Tax computed this adjustment as $1,099 as shown in the Itemized Deduction Schedule associated with Line 41 of IT-196.
I think this is an error in Turbo Tax. Any thoughts would be appreciated.
