Form 1040 Schedule A Charitable Contributions Line 13

[wnt]

I have large charitable contributions and I'm using using TurboTax Premier 2024 . My cash giving is slightly under 50% of AGI, and I also have a carry-over from previous years. My problem is that if I increase the amount I report for my cash giving, my total deductible amount decreases, and my tax due increases. What's going on?

To be specific, on Form 1040 Schedule A, if line 11 (deductible cash gifts) increases by $2000, then line 14 (total deductions) decreases by $2000.  Its seems to me that TurboTax is not handling the amounts in lines 13 and 13 correctly.  Any comments, explanations, advice??

[LeticiaF1]

There are limits that apply to charitable contributions, they can't be more than 60% of your AGI.  Limits can also be lower depending on each situation.   This is probably what your case is.  

Publication 526 (2024), Charitable Contributions

[wnt]

Yes, there are limits, and I seem to be hitting them. But I still don't understand what is going on. Here is more detail.

I have high charitable deductions. My cash donations are almost 50% of my AGI, and my cash and capital gain (stock) deductions together are over the 50% limit. I also have carry-over deductions from previous years for both cash and stock.

When I enter my cash and stock charitable deductions (Premier 2024), Schedule A will show my cash contributions on line 11 and the eligible portion of my stock contributions on line 12. Line 12 is basically the amount of contributions I can add to my cash contributions to get to the 50% limit, so lines 11 and 12 together take me up to the 50% AGI limit. TurboTax also shows on line 13 a carryover contribution, which is identical to the eligible stock contribution on line 12. Then it adds all three of those to get line 14, my total charitable deduction.

But that is double counting. The stock deduction already took me to the 50% limit, and I don't think I can take the carryover deduction in addition, but that is what TurboTax is doing.

I played around with this and removed some of my cash deductions. That means line 12 and line 13 both increase, and the result is that I can get a result where TurboTax is computing my charitable deduction to be thousands of dollars over the 50% AGI limit.  And that means that if I report lower contributions, because of the double counting, my allowable deduction increases, and my tax is lower.

Is there something else going on here that I don't understand?

[wnt]

I made up a test case you can run yourself to see the problem I am having.

Enter numbers in TurboTax that give you the following:
   Income values to give AGI: 160000
   Charitable donations - cash: 70000
   Charitable donations - stock: 20000
   Charitable contribution carryovers: from 2023
       2023 30% capital gain: 10000
  Other deductions on Schedule A: 10000

With those numbers, I get this on Form 1040:
   Line 11 - AGI 160000
   Line 12 and 14 - Itemized deductions 100000
   Line 15 Taxable Income 60000
   Line 16 Tax 1448

If I increase the cash charitable giving to 76000, I get:
   Line 11 - AGI 160000
   Line 12 and 14 - Itemized deductions 94000
   Line 15 Taxable Income 66000
   Line 16 Tax 2048

So as the charitable donations go up, the tax goes up. That's backwards. The problem seems to me to be in line 13 in Schedule A. It's allowing me to get a larger deduction than the 50% limit -- in fact, larger the less I give, up to a limit.

Does that seem correct? Is there something I'm not understanding? Any explanation?

[wnt]

I got a reply to my previous message giving the specific test case. That reply seemed to be truncated. But now I can't get back to it. It doesn't seem to be in this thread. How do I navigate back to it?

In any case, I am replying to that reply here.

I entered the cases you mentioned -- $80,000 cash contributions with tax due of $2473, and $76,000 cash contributions with tax due of $2048. (I think those are the same you got -- I can't get back to your message to verify.)

So the higher the contribution, the higher the tax. That's my problem.

[MarilynG1]

Sounds like the carryover amount from 2023 is the issue, if it's identical to your 2024 contribution.  If you're using TurboTax Desktop, check the amount on the Federal Carryover Worksheet, Line 26.  If this is not the same amount as shown on your Schedule A, you can change the amount on the Carryover Worksheet to the correct amount, which will then flow to Schedule A.

In TurboTax Online, scroll down from Charitable Contributions to 'Charitable Donations Carryover from 2023'.

@wnt 

[wnt]

Thank for responding, and yes I am using TurboTax Desktop.

I still have questions. Yes, I think the carryover amount is the issue. But no, it's not identical to my 2024 contribution. Those are two different values.

In the Carryover Worksheet, line 26 is:
(a)           (b)        (c)         (d)      (e)
blank   blank   4820.   blank     0.
In other words, only cell (c), 30% Capital Gain, has a value.

And yes, if I put something in field (a), it changes my deductions and my eventual tax due. But how am I supposed to know what to put there? TurboTax is importing those from my previous years TurboTax files. And I don't have any Other Property carryover, so that field is blank, which is correct.

For Schedule A, TurboTax is computing a value for each of line 12 and line 13, and adding those to line 11 to give my total charitable contributions. But that total is more than 50% of my AGI (and I am in the 50% case, not the 60% case), but TurboTax is not limiting my total contributions to 50% of AGI. I think that is incorrect.