Why TurboTax doesn’t deduct charitable donation from my AGI directly?

[jwok11]

I have a charitable cash donation of $50k (501c3) that’s listed as an itemized deduction on schedule A. And I have an IRA conversion to Roth IRA of $80K as my total income. But the $50K donation wouldn’t show up on 1040 10a. So my AGI stays the same on TurboTax 2020 as $80K. I’d hope the donation can help me to reduce the AGI (line 11 on 1040) to $30K. The $50K donation is only listed as an itemized deduction... Is this a bug of TurboTax? What would be the work around to reduce AGI with a high donation? Thanks.

[SteamTrain]

That particular field between lines 10a and 10b is just a worksheet number,   (I'm not sure exactly what/how that -particular "worksheet" field works . )   It doesn't really show on the actual form 1040

But if you look down ,  lower.............the 50k you entered then actually shows up as a deduction on line 12 of your form 1040.....that comes from your total itemized deductions on the Schedule A

[Texas Roger]

EDITED: The amount on the bottom line of box 12 is your taxable income after the charitable contributions are subtracted from it. It is listed right below the charitable contribution amount. 

[Opus 17]

For 2020 there is a special rule, you can deduct up to $300 cash charity contribution on line 10 before the AGI, or you can take the schedule A itemized deduction on line 12, but not both.  Your deduction is way more than $300, so you are taking it on schedule A and line 12 instead of line 10. 

[Mike9241]

READ line 10a. What does it say? 

the limit is $300 and to get the $300 on line 10a you can't itemize. With $50,000 in charity, your itemized is going to be more than your standard deduction so line 10a will be blank.

it may not matter much. for Federal you'll pay taxes on the $30K.  some states allow itemized deductions others do not.

[SteamTrain]

Actually, I think all that bold text is a "worksheet" Pre-instruction to line 10b.....but only IF you will be using the Std Deduction for line 12.   If you are using itemized deductions in line 12, 10b must be left empty.

10a is for some entirely different purposes from entries on Schedule 1

____________________

All of which points to another situation, where working in Forms Mode can get confusing to even experienced users.

[Opus 17]

This is what the actual 1040 looks like.  The bold instructions for 10b and the "50,000" in blue are part of a "smart worksheet" embedded in the tax program forms view but are not part of the actual tax return.  You will deduct your contributions on line 12. 

[rjs · Accepted solution]

Charitable donations that are claimed as an itemized deduction do not directly reduce AGI. Your AGI is calculated first, then itemized deductions are subtracted from AGI to get taxable income. So the donation reduces your taxable income. It does not reduce your AGI. That's the way Form 1040 works.

You said you expected to see the donation on "1040 10a." On Form 1040 for 2020, line 10a is not charitable contributions. It's other adjustments from Schedule 1. Form 1040 line 10b is for charitable contributions up to a maximum of $300 if you are not itemizing deductions. If you are claiming itemized deductions, Form 1040 line 10b is not used.

[SteamTrain]

Double-take...slip?

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@rjs wrote:

....... It's other adjustments from Schedule 2.   ,.......

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I think it's Schedule 1.    (At least for the 2020 tax forms )

[rjs]

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@SteamTrain wrote:

Double-take...slip?

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@rjs wrote:

....... It's other adjustments from Schedule 2.   ,.......

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I think it's Schedule 1.    (At least for the 2020 tax forms )

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Thanks. I corrected my post.

I saw that error before I posted, but I got interrupted and didn't make the correction.

[Hal_Al]

 For 2021, the $300 ($600 MFJ) "above the line" charity deduction is after AGI (in 2020 it was before AGI).  It now goes on line 12b of form 1040 (in 2020, it was line 10b).

 Itemized deductions (including charity) on schedule A, as well as the standard deduction, has always been after AGI. 

So for 2020, a taxpayer with $50,000 of charitable deductions could deduct $300 to reduce AGI, but the other $49,700 would go on schedule A and not affect AGI (but would reduce taxable income).  For 2021, the entire $50K deduction comes after AGI.