Entering appreciated stock donation to a Donor Advised Fund in Turbotax

[NMtaxpayer]

Could you please explain step by step how I enter an appreciated stock donation to a Donor Advised Fund in Turbotax Premiere?

[DaveF1006]

Yes, here is how you will enter. If in Turbo Tax online.

1. Federal>deductions and credits>see all tax breaks
2. Go to charitable donations>Donations to Charity in 2020>Start

3. Say yes on the next screen when it asks if you made charitable donations. You will say yes. 

4. The next screen you can add money and Mileage and travel expenses

5. The Donor Advised Stock fund is like money so you will select Stock.

6. Then answer the questions regarding your donor advised stock.

[NMtaxpayer]

Thanks for the reply.  I think I am more stuck on the 1st question below, and if that answer is something other than "No", I'd have questions with the following numbers below as well.  Thank you!

1. The first question I'm seeking help with is whether or not "I attached conditions on a donation" (such as "specified how the donation should be used", "allowed someone other than the charity to receive income from the donation"). If I should select "No", I could just enter as a donated stock and I'm good to go. But if I did, I need to enter the donation as an "item" and there are other questions I wonder how I should answer such as:

2. Did I restrict, temporarily or permanently the use of the stock donated to Fidelity Charitable? (I would think no)

3. Did I place restrictions limiting the stock I donated to Fidelity Charitable to a particular use? (possibly yes since I can choose which 501c3 it could go to?)

4. If yes to 3, Describe the special use restrictions: (not sure what I would put here)

5. Describe the physical condition when donated: excellent :happy

6. Does this item need an appraisal: Hope not

7. Amount received from bargain sale: Leave blank

8. Enter average trading price: I assume this the FMV of all the shares as stated on Form 8283

9. Enter the donation type: 30% charity I assume

Thanks for any additional insight

[DaveF1006]

Yes, if you are certain you do not have those restrictions that are prescribed above,  IRS wants to know this because they want to be reasonably assured that you had all rights to assign ownership rights to the charity. 

Yes, all donor advised funds are to be donated to 30% charities.

[NMtaxpayer]

So am I correct to assume if it is a Donor Advised Fund that acts as it is intended by IRS guidelines, I would not have any controls or restrictions of appreciated stock donation, and therefore, I can simply add this in Turbo Tax as a stock donation, instead of an Item donation?

[DaveF1006]

That is correct. Here is an IRS link that has information that you might be interested in.

[NMtaxpayer]

So I entered as Donated Stock in turbotax and later selected it would be considered a 30% charity.

However, Turbotax ended up limiting my stock donation to 20% of AGI which I found out in the "Charity Limit 1" worksheet.

How can I enter my appreciated long term stock donation in turbotax and have turbotax limit it to 30% (instead of 20%) of AGI as should be done for Donor Advised funds / DAF?

[Cynthiad66]

 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.

[wnt]

I have the same problem.

[amehta1030]

I have the same problem: entering charitable donations to a Donor Advised Fund; TurboTax puts it down as a 20% AGI donation. It needs to be a 30% AGI donation, but I see no way of changing it. How does one enter a charitable donation to a DAF as a 30% AGI donation?

[KlisterKid]

One question I need answered is: if I inherited the stocks via the death of a parent. I followed the steps in TT but I got into a loop when entering the donation of a specific stock to the DAF.

Any thoughts?

[gem_tax]

In 2021, we created a donor advised fund (DAF) from our brokerage account. Over $14,000 was transferred from our  brokerage account into the DAF. 

"Donors receive an immediate tax deduction of up to 30% of adjusted gross income (AGI) for gifts of appreciated securities, mutual funds, real estate and other assets, and can enjoy five-year carry-forward deduction on gifts that exceed AGI limits."

Where does the immediate tax deduction come from?

In Turbotax, I had to enter a cost basis for the DAF in the charities section which lowered the $14,000 amount to just the cost basis ($1500) . This brought us back to the standard deduction from itemizing. Is this the right way to do this? The IRS says to use from 8283 for non-cash charitable contributions which TurboTax did not have us do.

[GeorgeM777]

It could be.  There are limitations if the donated stock was held one year or less.  How long have you held the stock that you transferred to the donor advised fund?  Moreover, because charitable deductions are itemized, if your standard deduction is greater than your itemized deductions, TurboTax will default to applying the standard deduction. 

@gem_tax

[gem_tax]

The mutual fund Purchase Date was 8-4-2011 - Purchase Price $61.64/share - Total Purchase Cost $2157.67.

The mutual fund went into the DAF in November 2021 in the amount of $14,000 in the charitable contributions section in Turbotax. This initially lowered our taxes owed in Turbotax but then I was asked to enter the cost basis, which kicked us back to the standard deduction. Does the Donor Advised Fund go into the charitable contributions or elsewhere like form IRS Form 8283? Please help.

[MarilynG]

Yes, your donated stock is entered in Charitable Contributions.

TurboTax prepares Form 8283 for you, based on your interview entries.  Be sure to indicate 'none of the above' on the page asking about restrictions for the donated stock. 

You will see the FMV of your donation on the Charitable Organization Worksheet and Form 8283.  You get the FMV of the stock donation reported on Schedule A. 

If you're using TurboTax Online, you can't see the worksheets until you pay for your return.  The fact that your tax is going up/down may not be due to your charitable donation cost basis entry. 

The increased/decreased income may disqualify you from a credit you were receiving previously.

You can transfer an online return to desktop/download to have access to the forms as you prepare your tax return. 

@gem_tax