@smcneil2 wrote:
So why did TurboTax entered "carryover" data from tax years 2018 and 2019 (years that I took the Standard Deduction) to the current year 2020 where I itemized? A Turbotax bug perhaps?
You are a late addition to the discussion with different facts, and no one here can see your tax return.
In general, you can't take the standard deduction and postpone your itemized deductions until you have enough. You either itemize or take the standard deduction.
For charitable contributions, if you make large donations (more than 50% of your adjusted gross income, for most charities), your deduction will be limited and you can carry the unused donations forward to the next tax year. In that second tax year, you must apply your current year donations first, then the carryforwards. If you are over the limit again, the excess is carried forward, for up to 5 years.
If you chose the standard deduction in a carry forward year, special rules apply that are not described in IRS publication 526 (the publication says they are too complicated and you should see a tax professional). Reading the regulations, it appears that a plain language reading of the rule would mean that your carryforward is partially "used up" but is not necessarily forfeit.
For example. Your taxable income in 2017 was $50,000, and you donated $100,000 to your church. Your charity deduction was limited to $50,000, with a $50,000 carry forward. Then in 2018, your income was $25,000 and you donated $1000 to your church, but you took the standard deduction. Your deduction limit would have been $12,500, and since you donated $1000, you are considered to have "used up" $11,500 of your carry forward, leaving a remaining carry forward of $13,500. In 2019, your income was again $25,000 and you donated $1000 to your church, but you took the standard deduction. Your deduction limit would have been $12,500, and since you donated $1000, you are considered to have "used up" $11,500 of your carry forward, leaving a remaining carry forward of $2,000.
This is not exactly right since for some years, the maximum carry forward was 60%, not 50%. Also, it would be easier to hit the limits if we were talking about 20% or 30% limit donations (certain kinds of property, and certain exempt organizations.)
Turbotax will prepare a carry forward worksheet for each tax return. It would be included in the PDF for "all forms and worksheets". I would start by examining all the tax returns you are concerned about, find the worksheet, and see if you can follow the calculations accordingly.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Sign In
