Charitable donation impact

[taxbee75]

I have a charitable donation without a receipt that brings my itemized deduction to only $27,739. So I was going to take the Standard deduction of $27,700 and not worry about paperwork, etc. But Turbotax is showing me about a $5,000 additional refund with an itemized deduction, which is only $39 more than the standard deduction. How is that possible?

[rjs]

I can't think of a way that it would be possible. Something else must be going on besides an additional $39 of deductions. I'm not even sure where to tell you to look, but here are a couple of ideas.

First look at Form 1040 line 12 and make sure it's actually going from $27,700 to $27,739. Look at the actual tax form, not a TurboTax screen. Also see if line 15 (taxable income) is reduced by $39.

Check your entry of the charitable donation. Make sure you didn't accidentally add an extra digit or omit a decimal point.

[taxbee75]

That's why I'm puzzled! Yes, I checked the taxable income and deductions, showing that $39 difference only but a big difference in a refund. I just now checked the actual 1040 form, too. And if I reduce my donation by $50, then it flips to the standard deduction, and my refund reduces by $5k. Very strange!

[rjs]

What else changes on Form 1040 lines 16 through 33? There must be a big change somewhere.

Maybe the slight reduction of taxable income crosses a threshold that makes you eligible for a credit that you would not otherwise get.

[taxbee75]

I found the line item now, but I still don't know the math.

Tax is being reduced by "Credit for prior year minimum tax. Attach Form 8801" from Schedule 3 in line 20. And with the tiny increase in charity, that credit is almost getting doubled. Hence, the bigger refund. 

I may have to read up on that 8801 Form now to understand the calculations.

[Mike9241]

another thing you can do is to compare 2022 to 2023 line for line  

[taxbee75]

There was no value in 2022 return. So not sure how Turbotax is calculating this for 2023. I haven't manually calculated using Form 8801 to see if that somehow matches with what Turbotax is populating.

[BillM223]

You apparently paid Alternative Minimum Tax in prior years, and depending on the circumstances, a credit for such tax can be carried over to the current year. This is reported on form 8801.

I suggest you go back to Itemized Deductions, and look at form 8801 to see what TurboTax did (if you can see your output forms).

It does not surprise me that you can see such large changes in your refund when dealing with the Alt Min Tax credit.

[taxbee75]

unfortunately I could not see all the forms including 8801 in Turbotax. So I may have to do manual calculatation.