Where is the amount on the VA Schedule ADJ, line 2B, code 99 coming from on this individual return?
This amount is being calculated on the VAWK_MED and carried to the VA Schedule ADJ, line 2B, code 99 due to Virginia decoupling from federal guidelines for medical expense deductions. Section 11027 of the Tax Cuts and Jobs Act temporarily lowered the deduction floor to 7.5% of federal AGI while Virginia decided not to conform to federal guidelines and only allows for a 10% deduction floor. Virginia requires that the difference between the federal medical expense deduction amount and the VA medical expense deduction amount be added back on the VA Schedule ADJ, line 2B with a code 99. Per the VA 2017 Medical Expense Worksheet:
"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... 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”."
For more information, review the following links: