Charitable Contribution Error on California CA(540) and 540

[fbachmei]

My California State return was rejected due to an error in TurboTax Software. The $300 Charitable cash donation is erroneously entered in CA(540) Part 1, line 22, column B (subtractions). Also, Form540 line 16 has 300 entered although there here is no entry in form CA(540) part 1, line 23, column C.

I have the most recent update downloaded, on Feb 19.

The errors have not been resolved. I am unable to edit the forms directly in turbotax "forms" view.

How do I resolve this issue?

[VSS]

I have the same issue. I did not file the returns yet, but paid in advance to review the forms and noticed the same error. Now I am also concerned that my CA State return would be rejected if I submit it with this error. Turbotax needs to provide a solution to fix this issue.

[fbachmei]

I called the support line last week.

The representative didn't seem to understand the issue but told me that an update to fix California general issues was coming.

I downloaded a update this morning. The problem is not resolved.

[ReneeM7122]

This error  is due to a new provision in the CARES Act.   Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.

However, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.

To fix the error, first you need to handle it in the Federal side, and then it will carry to State, where your error seems to be arising.  Here's what to do:

1. Delete the $300 in the error check.
2. Then go back to Deductions & Credits and enter the contribution there, in the Donations to Charity topic.
3. Then click Done with Donations and proceed through the screens until you get to the screen that tells you that TurboTax has added in the contribution.

 The contribution will be back on Form 1040 line 10b, but it won't be flagged as an error. It only gets flagged if you enter it when prompted after you finish Deductions & Credits and the software tells you that you are getting the standard deduction. It will not get flagged if you enter it in Donations to Charity.

@fbachmei

fbachmei

[VSS]

Thanks for the response @ReneeM7122. I followed the steps and I don't get the error check anymore. But now there seems to be another issue. On Schedule CA (540) line 22, Columns A, B, and C now show $300 each, and Line 23, Column C amount has been reduced by $300. The error I think is when this amount gets transferred to Form 540 line 16, where the amount shown is the full amount without the $300 reduction (which I think is the correct amount to show on 540 line 16). I think what needs to happen is that the $300 should not be populated on Schedule CA (540), line 22, Column C, as CA does not allow this deduction and hence there should not be a state adjustment by the addition of $300 in Column C to further reduce my taxable income. Not sure how to resolve this issue.  

[whodiini]

I contributed over $300 cash to charity and in turbotax federal, took the deduction when asked.  But in filling the CA turbotax, the program subtracts the $300 and adds that back to income.  My question is whether this is correct?  If it adds that back to income (because CA doesnt allow that), does turbotax increase the charitable contribution amount by the $300 as well so that it is deducted elsewhere? 

[andrewchen5678]

Any success for getting the state return accepted yet? Does your return looks like mine for donation deduction and adjustment?

I have these on my federal 1040 return:

and for my state return I get $300 on form 540 line 16 for donation difference: 

and these on schedule CA 540 Section C:

and according to instruction here: https://www.ftb.ca.gov/forms/2020/2020-540-ca-instructions.html

---

Line 22

Add line 10 through line 18a and line 19 through line 21. However, if you claimed any of the following deductions below or if you made any of the adjustments described in the instructions for federal Schedule 1 (Form 1040), line 22, include that amount in the total you enter in column A, line 22.

• Charitable contribution as a standard deduction (CCSD) on federal Form 1040 or 1040-SR, line 10b
• ...

---

and

---

Line 23 - Total
Subtract line 22 from line 9 in column B and column C.
Also, transfer the amount from:

• Line 23, column B to Form 540, line 14
  If column B is a negative number, transfer the amount as a positive number to Form 540, line 16.
• Line 23, column C to Form 540, line 16
  If column C is a negative number, transfer the amount as a positive number to Form 540, line 14.

---

It looks right to me.

[Cynthiad66]

 Yes. There is an issue with the contributions deduction and TurboTax is working to fix it.  We do not have an estimated date of correction, at this time.  I suggest you check back often to see if the correction has been made.

There is a problem with the Contributions section of the Itemized deductions and also the above the line $300.00 deduction.  Because of the many changes due to the CARES Act, IRS is still developing the forms and publications on this issue.  Last update was January 13th where everything is still in draft.  Once IRS finalizes the forms, we will be able to update TurboTax to accurately reflect your Contributions deduction.

Here are some of the changes due to the CARES ACT

The new legislation allows tax deductions on two types of charitable gifts. First, it allows up to $300 given to a qualified charity to be claimed as an above-the-line deduction. After the Tax Cuts and Jobs Act, which went into effect in 2018, increased the standard deduction, many taxpayers had less incentive to donate to charities. Instead, they took the standard deduction and stopped itemizing.

For taxpayers who will itemize deductions, the CARES Act effectively suspends the limit on deductions for cash contributions to public charities for 2020.  “That allows individuals to completely wipe out their AGI, and their tax liability, with a charitable contribution.

[whodiini]

Will this be fixed in the March 25 release? 

Is the issue in the federal forms or CA state form or both?

[andrewchen5678]

Can you confirm if the answer I provided earlier in regard to turbotax's treatment for the additional $300 charitable contribution for form 1040 with standard deduction and California return is correct. I thought there was no issue with turbotax and I am ready to file tax, but after hearing your answer that is a bit out of context, I get confused and wonder if the answer I provided earlier is incorrect and there is an issue with turbotax and I need to hold off from filing until there is an update even though everything looks right to me?

[brbic]

Here is my take on this issue. The main problems are:

1) Turbotax's treatment of lines 22 and 23 on CA (540) and the transfer of these numbers to lines 14 and 16 on Form 540 are completely screwed up.

2) The CA FTB's instructions are either a) extremely unclear or b) completely wrong regarding the transfer of the CA (540) line 23 numbers to lines 14 and 16 on Form 540.

I don't think there is anything wrong on the Federal side wrt. this issue.  I hope Turbotax's update will be done with the assistance of CA FTB, so FTB realizes the instructions are bad and gets them fixed.

[whodiini]

Thanks for the update brbic.  I looked at line 16 form 540 and it says to copy line 23C from 540 (CA).  And the calculated number on line 23C doesnt transfer over to line 16.  So I agree that there is something messed up here. Off by several thousands of dollars!

While this is indirectly related to the charitable contribution issue, it is an important detail to get corrected - otherwise the tax filing would be incorrect,

[whodiini]

I looked more closely and I am not sure if turbotax does it correctly or not.  The instructions say:

Also, transfer the amount from:

• Line 23, column B to Form 540, line 14
  If column B is a negative number, transfer the amount as a positive number to Form 540, line 16.
• Line 23, column C to Form 540, line 16
  If column C is a negative number, transfer the amount as a positive number to Form 540, line 14.

I have for 23B a negative number say, -300 for example

I have for 23C a positive number, say 500 for example

So it says to enter 300 in 540 line 16.  It also says to enter 500 in 540 line 16.  What got entered by turbotax in 540 line 16 was 300+500 = 800.  No idea if this is correct since the instructions do not say to add the 2 numbers together.

[JMS306]

I am the same boat as you, AndrewChen5678.    Once you take note of the weird 'transfer your negative subtraction to other column to make it a positive addition'  instruction, it seems to make sense to me and my totals seem to be coming out right.  Hesitant to file, however, based on the post by Cynthiad66, saying there is a known issue that needs to be fixed.   

[andrewchen5678]

On my final return I had some treasury bond subtractions to offset the 300 charitable contribution, resulting a positive number on line 23 column B of schedule CA (540), and when I e-filed mine, it went through. I am not sure if it works if column B is negative.