Is turbotax (web version) correctly applying the new charitable deduction limits under one of the congressional pandemic legislative acts (higher agi limit possibility)?

[mike s2]

I'm not expert re: this, but wondering if taking the higher permissible deduction should be offered as an election.

[MarilynG1]

Yes, TurboTax is applying the new Charitable Contribution limits. The CARES Act temporarily eliminates the limit placed on cash contributions you can deduct if you itemize your deductions. 

Also remember that under the CARES Act, you can still deduct up to $300 in cash contributions if you claim the standard deduction.

Click this link for more detailed info on Donating to Charity. 

[mike s2]

thanks, but it looks to me that my cash donations are being limited by Turbotax computations to 60% of agi vs. 100%.  I am using the web version.

[Cynthiad66 · Accepted solution]

 Yes.  Based on the current law you will be allowed the most beneficial method to you.  However, 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.

[tandrix]

I cannot file my 2020 1040 until this [ Gifts to Charity ] bug is corrected.  The Help screen for Item 14 Schedule A also requires correction.

[ReneeM7122]

If you receive an error stating that your contributions have an unacceptable value, try the following workaround. 

 Click Deductions and Credits

1. Select Review/Edit
2. Click Edit to the right of Standard Deduction
   ​​Click OK, Sounds Good
3. Click Wrap Up Tax Breaks
4. Click Continue
5. Make sure that $300 is filled in and then click Continue
6. Click Lets Keep Going

If the error persists, then go through the next work around.

Here is the second work around for claiming the Charity Deduction:

1. In TurboTax select Federal in the panel on the left
2. Select Deductions & Credits at the top of the page
3. Under Your Tax Breaks - Charitable Donations 
4. Click START to the right of Donations to Charity in 2020
5. Click YES
6. Click ADD next to Money
7. Type in the name of the charity that you donated to
8. Type the amount of the donation
9. Select Done with Donation
10. Select Done

Now the deduction should appear on Line 10B and in the Charitable Contributions screen.

How the CARES act changes deducting charitable contributions made in 2020

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.

Keep in mind, it is very important to keep records of your charitable contributions.  If the IRS asks about them later, they will be denied if you don't have a record, receipt, letter, etc.

@tandrix

[mike s2]

Is this response for those trying to take advantage of the $300 possibility? The original question related to new AGI limits, and the response received was that Turbotax wasn't yet updated for the revised limits as IRS materials hadn't been finalized.

[ReneeM7122]

@mike s2

No, this response is not regarding IRS materials not being finalized.  The instructions to enter information in a specific way in order to get the correct credits according to the CARES Act.  Some users were experiencing an "unacceptable value" problem where there were zeros, and some had the $300 limit, which needs to be worked around. 

How the CARES act changes deducting charitable contributions made in 2020

 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.

Here are the instructions: 

If you are in TurboTax Online, the screen Charitable Cash Contributions under CARES Act appears as the end of Deductions & Credits. First you have to pass the screen Based on what you told us, the standard deduction is best for you at the end of Deductions & Credits.

But you have to qualify for the standard deduction before the screen appears.  So you may want to change the value of one or more itemized deductions to $1 so that you qualify for the standard deduction.

Follow these steps: 

• At the top of the screen, click on Deductions & Credits.
• Scroll to the bottom of the page and click on Wrap up tax breaks.
• Continue through several screens.
• At the screen Based on what you told us, the standard deduction is best for you, click Continue.
• At the screen Any Charitable Cash Contributions? remove the dollar amount.
• Continue through Federal Review to make sure that things look correct.

Then restore your itemized deductions dollar amounts.

See also this TurboTax Help article.

@mike s2