Medical Expense Limitation B - Nursing Home

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1

What is the proper or preferred way in TaxCycle to handle a Limitation B Medical Expense?
Taxpayer pays $32,000 to a Long Term Care Facility and has a Disability Tax Credit.
My understanding has always been under limitation B the taxpayer could claim one or the other.

I mistakenly presumed that clicking 'Limitation B" in the Medical Expense Worksheet (Attendant Care & Not Claiming Disability) would automatically remove the $8,112 claim on line 316 of Schedule 1 (and its provincial counterpart). Selecting that limitation in the Medical Expense Worksheet does not remove the disability claim on Schedule 1. The good thing, however, is TaxCycle does produce a diagnostic warning (Attendant Care Expenses were entered with Limitation B. Patient must not claim disability).

So I poke around a little further, and on the “Credits” screen I scroll down to the “Disability amount” section, where I can enter “Child or attendant care claimed for TAXPAYER by anyone”. Thinking that might reduce the claim, I gave it a shot and entered $32,000 in that box, but nothing changed, disability amount to claim still remains at $8,113 (plus the applicable provincial amount).

So next, I go to the Client “Info Screen”, and under Personal Information I manually select “No” to the question “Is TAXPAYER claiming the disability amount”. The income tax owing seems to work out correctly once I do this, however, now I get another yellow Diagnostic message “the data from AFR indicates the client is eligible to claim the disability tax credit, however no disability has been claimed”. On top of that, clicking no disability claim here did not cause the diagnostic warning in the medical worksheet to disappear.

So now I am at a point where manually saying no to claiming the disability seems to get the tax return to calculate properly, however, there are now 2 diagnostic flags.

1 - AFR suggests taxpayer is eligible for disability, but no claim made.
2 - Attendant care exepenses were entered with limitation B. Patient must not claim disability amount.

Is there actually a cleaner or proper way of doing this in TaxCycle? I’m sure I must have missed clicking or checking off something basic somewhere.

2

I had the same issue last year. I signed off the AFR flag in the Review tab. That got rid of both flags.
It was the only way I could do it.

3

I’ve had to do the same thing. Unclick “are you eligible for the DTC”. I would like to keep that box checked. For example, in the year of death it may be better to claim the DTC than the LTC costs. It would be nice to know that the person is eligible for the DTC.

4

Thanks for the confirmation Marcel & Kevin.

So…
As far as I can tell… the only purpose served by “Limitation B” is to activate a diagnostic warning flag in Taxcycle that essentially says “Make sure you don’t claim the Disability” :slightly_smiling_face:

Wouldn’t the optimal programming solution be that if “Limitation B” was selected in the Medical Expense worksheet the software should automatically enter a zero on line 316 and the provincial equivalent regardless of whether the client qualifies for the disability? I can’t see any circumstance where you could make a claim on line 316 if you claimed a Medical Expense tagged with Limitation B.

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5

I have always just signed off as well but your programming suggestion definitely makes sense. Will likely make the next release. :grinning:

6

I’ve had the same issue with option B.

Furthermore, with option A (capping the attendant care at $10,000), it would be great if TaxCycle added up all the “option A” rows and capped them at $10K combined. I had a taxpayer move to a different nursing home last year, so I had entered the two receipts - one for $6,000 and the other for $9,000 - on different rows. I expected TaxCycle would look at the combined balance and limit the claim to $10,000, but it did not… TaxCycle was including the full $15,000 as a deduction.