2021 Form 1040 AGI

[kamull01]

I am looking at my 2021 Turbo Tax Deluxe Form 1040.  Line 11 states your AGI.  AFTER that,  there comes the CARES Act $300 limit-for-singles charitable deduction (if you take the standard deduction) in line 12c.   So, the 2021 AGI does NOT factor in this specific charitable deduction. [This matches the lines and steps in the 2021 Form 1040 currently on the IRS website.]

The treatment of this specific charitable deduction appears to be different in the 2020 Turbo Tax Deluxe Form 1040 and the 2020 Form 1040 on the IRS website.  There  line 10c states the $300-limit charitable deduction and this is BEFORE the AGI is calculated in line 11.  So, the 2020 AGI DOES factor in this specific charitable deduction.

Is there a mistake in the currently available 2021 Form 1040?  Is the 2021 AGI supposed to be factoring in the $300-limit-CARES Act charitable deduction, but mistakenly does not?    I thought this specific charitable -deduction provision was supposed to be treated the same way in  2020 and 2021.

[rjs]

The IRS changed the form. It's not a mistake. In 2020 it was treated as an adjustment, or "above-the-line deduction," and it reduced AGI. In 2021 it's treated as a deduction, like the standard deduction or the QBI deduction, and it's subtracted after AGI is calculated.

I haven't researched it, but my guess is that the 2020 treatment was a mistake by the IRS, and they corrected it for 2021.

CORRECTION - See my new post below.

In any case, TurboTax is handling it as required by the tax law and the IRS.

[Critter-3]

I agree ... last year the amount was in the wrong place on the form ... it is an ADDITION to the standard deduction  NOT an adjustment to income.  They made the correction on the 2021 return.

[rjs]

@kamull01 @Critter-3 

OK, I did the research. It was not an IRS mistake. Congress quite intentionally changed the rules. The CARES Act, passed in March 2020, which created the original deduction, explicitly established it as an adjustment, adding it to IRC Section 62, which defines AGI. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, passed in December 2020, explicitly removes it from Section 62 and adds it to Section 170, which is charitable contributions, as a sort of special itemized deduction for people who do not itemize. (That's my own characterization. The wording of the law is very confusing.)

The IRS, and TurboTax, correctly followed the law for both 2020 and 2021, but the law changed.