In this situation, your expenses far exceed the 7.5% AGI (Adjusted Gross Income) threshold (for 2021).

Enter the planned expenses on Form 1040 Schedule A. Expenses for skilled nursing facilities are qualified medical expenses.

Create different scenarios by saving the returns with different filenames.įor example, you unexpectedly move into a skilled nursing facility.

Adjust withheld taxes to minimize the amount due.

Modify tax forms as necessary with the planned changes.

Make a copy of your current year's return and save it as a new filename.

There is no need to purchase new software. If the tax software does not provide a 'What if.?' feature, a simple and effective way to estimate taxes for the following year is to use the current year's return modified with the planned changes. If such a program produced a correct tax return for the previous tax year, then the 'What if.?' feature will likely produce a reasonable estimate for the current tax year, assuming no significant changes in the taxpayers' situations. These programs may, however, include a 'What If.?' worksheet (or similar name) available to estimate the succeeding tax year's situation. Tax software intended for sale to the consumer (not tax professionals e.g., the ones reviewed at The Best Tax Software | PCMag) to produce an official tax return is usually not available until November or December of the current tax year (and even then only in partial form).

Some places in which last year's tax law is still used may be noted in the Limitations section. No attempt has been made to verify that all calculations in all tools are correct, although these are all popular enough that, at least for the ones with a convenient feedback path, any egregious errors are usually found and fixed quickly. Tax estimation tools discusses several popular tax estimation tools, primarily for use during the current tax year, to help taxpayers choose the one(s) that will cover their situation best. This article contains details specific to United States (US) investors.

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