Monday, July 6, 2020

Medical and Dental Expense Tax Deduction Increased Under New Law Deduction Applies to Current Tax Filing

Raleigh, NC
Jul 6, 2020

The North Carolina Department of Revenue (NCDOR) announced today that under a new law signed by Governor Roy Cooper last week, the state now follows a more favorable 7.5 percent itemized medical expense deduction threshold. This new threshold mirrors the federal deduction, which was extended for tax years 2019 and 2020 under recent congressional legislation. The change, from the previous 10 percent threshold, applies to the current individual tax returns due by July 15.

“The more favorable medical and expense deduction will benefit many North Carolinians at a time when they need it most,” said Revenue Secretary Ronald G. Penny. “Applicable taxpayers who have not filed their return this year should make the change on their forms. Those who have already filed may file an amended return to receive the more favorable medical expense deduction.”

Under House Bill 1080 (Session Law 202-58), individuals who have not filed their 2019 North Carolina Individual Income Tax Return, Form D-400,  and who itemize North Carolina deductions for tax year 2019 on Form D-400 Schedule S, Supplemental Schedule, may deduct qualifying medical and dental expenses paid during 2019 that exceed 7.5 percent of adjusted gross income.  Taxpayers can calculate the amount they are allowed to deduct on Schedule S by substituting the updated 7.5 percent threshold number for the 10 percent threshold number printed on Line 22c. 

Taxpayers who have previously filed a 2019 Form D-400 and who benefit from the change to the threshold amount, may file an amended return to recalculate the medical expense deduction (See Form D-400 Schedule S Lines 22(a) through 22(d)).  

Read the Important Notice