North Carolina Charitable Contribution Carryover in Turbotax 2020 correct or an error needing a fix?

[RVG7]

The NCDOR.gov website (https://www.ncdor.gov/taxes-forms/individual-income-tax/north-carolina-standard-deduction-or-north-c...), states that Charitable contributions are allowed as an itemized deduction, however, for 2020, NC decoupled from the temporary increase allowed under the CARES Act that allows and individual to increase charitable deductions from 60% to 100% of AGI.  NC adopted the Code as of Jan 1, 2020, which excludes the CARES Act, and NC individuals may only deduct qualified contributions up to 60% of AGI.

In preparing my uncle's tax return, for 2020 there is a new section on the NC Standard/Itemized Deduction Worksheet, "Gifts to Charity", (this section was not in 2019 Turbotax worksheet). This section allows him to list a "Carryover from prior year" of 144,877 (which is the correct figure from his 2019 federal return).  This results in him having a deduction greater than both 60% of his AGI and even 100% of his AGI, and results in a negative 91,149 of NC taxable income on line 14 of D-400.  

If itemized charitable deductions for NC residents are limited to 60% of AGI, for 2020, my uncle's AGI is 111,546, which would result in his total charitable contributions for 2020, to be limited to 66,928.  For 2020, his charitable giving amounted to $26,743, so his charitable contribution carryover would then be limited to $40,184.  If this is a correct understanding, is Turbotax going to correct this in the 2020 NC state return?

[SteamTrain]

@RVG7    I think you are correct....but you probably have to call Customer Support to get it looked at, so that they can get a Diagnostic File from your Prep, dn then they can examine the problem in detail.  That's the only way it's going to get fixed.

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

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In my tests...though I can't know exactly if I'm doing it right;

1)  The forms mode (in desktop software) Charity Limit worksheet appears to calculate a proper 2020 limitation that ends up in line 43, with the excess to be carried to 2021 in line 44.

2) The line 43 value from that, I "think" is supposed to end up on line 4 of the Gifts to Charity section on the forms-mode "Deduction Wks"   with some kind of printing to the left of line 4 that says "Limited" or some-such.  (Line 3 would be the full carryover amount).  That is the place where the software has seemed to screw up.... that line 4 value has to come from the Charity Limit worksheet 

3)  then the, the PROPER line 4 value from the "Deduction Wks" needs to get carried to line 6 of the new NC Schedule A.

But even that can get complicated by a person who also chooses to donate 100% of their AGI in 2020 too, since NC only allows 60% for any new 2020 deductions....that's getting messy, and  may only apply to a pretty small population in NC...but still needs to be fixed.

[DonaldCarver]

I agree that it is broken.  My carryover from the preceding year is included in the amount on Schedule A line 6, even though the Charity Limit 2 worksheet showed that the limit was already exceeded and this carryover should be carried-over again to next year as well.

My question is:  what's the workaround?  It shows this is a Calculated field and will not let me enter/override the value.  I'm stuck and can't file it.

[SteamTrain]

Well, the best  solution is to get it reported to Customer Support, and get TTX started working on it, then revisit the situation towards the end of March to see if it's fixed (unless they tell you it's fixed sooner).  AND of course, it will be important that absolutely every scrap of income has been entered into the Federal tax return.  Some Brokerage tax forms are still in the process of being issued, and some may not come until March 1st.  Thus, the value on line 43 of the Charity Limit 2 worksheet might change too.

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[RVG7]

I think SteamTrain (in above post) provides a good link to Turbotax to make a claim and perhaps allow them to review your specific file.  I will do this once I download my uncle's consolidated 1099 from Fidelity, which just became available.  I hope that with our posts of this error, TTax will update and provide a correction to the NC form, as it is definitely not correct and in my case allows a deduction greater than all income.  Thanks for your agreement on the issue.

[RVG7]

Thank you SteamTrain for your posts and agreement on the charitable contribution error in the NC Ttax software.  Once I download the final income or 1099 consolidated from Fidelity, I will have all income.  At that time, I will report this to Customer Support.  I hope to get this done by end of the week.

[DonaldCarver]

I called yesterday morning and got cut-off.  The support rep had taken my email and phone number, but he never called me back.  I didn't have time to wait on-hold another 30 minutes to get through to speak to someone, so I didn't try again until last night.  

Heather was a joy to talk to, confirmed the issue, and kept me on the phone while their dev team looked into it.  The devs confirmed the problem, but no immediate solution or workaround during the call.  So maybe it will be fixed by the time you need it.  

I'm not waiting on brokerage statements or anything like that, so I'm ready to file as soon as it's fixed.

[DonaldCarver]

PS...I also referred them to this forum post for more info.

[RVG7]

I noticed there was an TTax update to the NC form today when I logged on.  This update does not solve the problem.  I am going to update the filing with the last 1099R information in the next few days, and will then see if TTax corrects the NC form/worksheet for correct 2020 NC charitable giving limit of 60% and not 100% as it currently stands.  If they do not correct it in a week or so, I will have to call and hopefully get a shared file to them so they can see how off their current NC form, which still needs to be corrected.

[SteamTrain]

@RVG7 

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I wouldn't have expected the fix to come with last night's update.  As I looked at the issue, from what I can see, the programming decision tree needed is going to be pretty complex, and it may take a couple weeks to get it right.   One week if they get someone/team to really concentrate on the possible permutations of what the US Govt allows a person to choose, and then what sub-part NC allows.

Software updates usually only occur on Wed & Thurs evenings, with many State updates on Thurs evening...so checking on Fridays is more likely to show a change in the NC software.....If one occurred.  An NC software update did occur last night though....so I suspect nothing more will happen until next Wed/Thurs evening..

[DonaldCarver]

This week's update still didn't fix it for me.  Plus I got an email saying they were going to close my case because I hadn't replied to their request for a copy of my returns...which I did send twice, each time they asked.  So it looks like they have more issues than just their own tax software.  Very frustrating after waiting on-hold with them for so long.

[SteamTrain]

@GabiU   

IS anyone at TTX still working on this BUG.   I've updated my own software again this morning (rev 19 or 19.1) and NC software still has this  bug.

I also reported it to you and the Moderators thru the proper private email channel on 16 Feb.....I didn't get a response from anyone there.....so I have no idea if anyone is paying attention to that.

On 16 Feb, I provided y'all a Diag File that clearly shows that the NC software is not limiting the Charitable contributions (including the 2019 carryover) to 60% of AGI, as required by NC....and it is not only allowing 100%...it goes over 100% as an NC deduction .

Desktop software,  Diagnostic file code :  742918

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"N.C. Itemized Deductions

Charitable Contribution Limitation - North Carolina does not allow an individual to deduct qualified contributions of up to 100% of federal adjusted gross income ("AGI"). For N.C. income tax purposes, an individual may only deduct qualified contributions up to 60% of AGI (For more information on charitable contributions, see Page 20.)"

Above is notice on page 3 of:

https://files.nc.gov/ncdor/documents/files/2020-D-401-Instructions.pdf

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Yes, I understand that this year's problems are extraordinary, and work on other more common bugs probably received priority...BUT I would like to make sure this NC bug is being addressed by whatever software team is working on NC.

(I have no idea if the Online software has the same bug.....they'll have to test that themselves )

[RVG7]

Thanks for your input SteamTrain and DCarver.  You think you are out on this island by yourself, but this is definitely not fixed after these latest two NC updates. And yes, I still have a deduction greater than income, due to the 100% charity limit that should be 60%.  Unfortunately, I am doing this for my uncle who passed at the end of December and I have been covered up in other matters related to his estate.  It makes me wonder if HR Block or another tax software program are in my future.  I left TTax the year they pulled the price increase.  It may be that time again.

[RVG7]

TurboTax made an update in their software to the federal filling for the 2020 Charitable Contribution Carryover, that is significant.  This update was not applied to my current file, I only discovered it by re-entering all the same data into a new file this morning, because of a quirk in the software that would not allow me manually enter 1099 data into a previous listed 1099 provider that would not populate.  By entering this data into a new file, this resulted in going from taxes owed of $1,848, to a refund of $4,811, under this second saved file.  I was skeptical of this huge change, but here is a rather technical article of what I found concerning the change under the CARES Act related to this (scroll to the 7th paragraph).

https://www.thetaxadviser.com/issues/2020/dec/changes-charitable-giving-rules-2020.html

In my case, working on my uncle's return, his AGI is $137,932.  In 2020, he made charitable cash contributions of $26,743.  He was allowed to use $68,966 of a 144,877 charitable contribution carryover (50%) and also use the full $26,743 for a total of $95,709 charitable deduction.  So this update for Turbotax seems to be correct.  I would recommend you check this calculation if you entered your data before this week, as it did not get applied to my original file.

Turbotax still has an error in the NC return software, that allows charitable contributions in excess of 100%, where NC did not adopt the CARES Act and limits it to 60%.  This has not been corrected.  I also posted this under the general Tax filing area because of this change and perhaps not correctly being brought forward into saved files before this change was made.

[SteamTrain]

@GabiU     @ErickaY 

IS ANYONE at TTX working on this NC software issue !