California Charitable Contribution Carryforward - College Access Tax Credit Fund

[DavidJFarrar]

I made a charitable contribution to the California College Access Tax Credit Fund that provides a state tax credit of 50% reported on California Form 3592.  Since this program provides a state tax credit, my understanding is that my contribution to this fund does not also qualify for a state tax deduction. However, the full contribution can be claimed as a tax deduction on my Federal Tax Return.  Thus TurboTax correctly makes a California Adjustment and subtracts this contribution on California Schedule CA (540), Part II Line 11 (Gifts to Charity). 

But then TurboTax reports what it thinks is an unused tax deduction as a Charitable Contribution Carryforward on line 17 of  the California Carryover Worksheet, thus allowing this deduction to be used in 2025 year tax return.  No other limitations on charitable tax deductions have been hit.

My question is:

1.  If the state income tax deduction is not allowed because the credit was instead taken, why is there a Charitable Contribution Carryforward on line 17 of the California Carryover Worksheet?  Is this correct or in error? 

Thank you very much. 

[MonikaK1]

The amount claimed as a credit should not be carried over to the next year as a deduction. Is it possible that some other contribution is being carried over?

You might go through all of the questions in the California interview again to make sure that any items of income, deduction or credit that need to be treated differently for California are identified correctly.

The California Schedule CA Instructions explain what adjustments need to be made for California differences and where to enter them:

Line 11 – Gifts By Cash Or Check

College Access Tax Credit – If you deducted a charitable contribution amount for the College Access Tax Credit Fund on your federal Schedule A (Form 1040) and are claiming the College Access Tax Credit on your Form 540, enter the amount used to calculate the College Access Tax Credit on line 11, column B.

Line 13 – Carryover From Prior Year

Charitable contribution carryover deduction – If deducting a prior year charitable contribution carryover, and the California carryover is larger than the federal carryover, enter the additional amount on line 13, column C.

Qualified conservation contributions deduction carryover – Under federal law, qualified conservation contribution deductions can be carried forward for 15 years. California law limits the carryover period to 5 years. If the California carryover period for qualified conservation contribution deduction has expired, and you are deducting a charitable contribution carryover for federal purposes on line 13, column A, enter that carryover deduction amount on line 13, column B.

Carryover deduction of appreciated stock contributed to a private foundation prior to January 1, 2002 – If deducting a charitable contribution carryover of appreciated stock donated to a private operating foundation prior to January 1, 2002, and the fair market value allowed for federal purposes is larger than the basis allowed for California purposes, enter the difference on line 13, column B.

[DavidJFarrar]

Thank you for confirming that when claiming a 50% credit, that there should not be anything carried over as a deduction.  The adjustments made for California differences relating to this deduction appear to be correct on line 11, and are subtracted out of the state at this step.  There are no other deductions or carryforwards that I could see.   It still thinks that I can carryforward this deduction. 

The only way I know to resolve this problem each year is to override the incorrect carry forward amount on line 17a in the California Carryforward worksheet, and enter zero instead.  I did this on my 2023 return and thus it did not show up on my 2024 return.  I will do the same thing now on my 2024 return and then this amount will not show up next year on my 2025 return. 

Perhaps your programmers could take a quick look to see if this particular deduction is handled correctly.  As you have indicated, it is different because it does not qualify for carry forward, compared to other deductions that do qualify, but could not be used in the current year.

Thank you