WhatIf with 2026 checked does not subract cash donation from AGI, line 37 (not itemizing)

[martinb0820]

Version:           2025 TurboTax Deluxe

Platform:        Windows 11 / AMD

Filing Status:  Married Filing Jointly (MFJ)

Issue: I entered a cash charitable donation and am not itemizing. In the WhatIf form with the 2026 tax rates checkbox checked, I would expect that the donation would represent an "above-the-line" deduction that is subtracted from the AGI. (Let me know if this assumption is incorrect.) However, the AGI remains unchanged. The work-around for now is to override the AGI.

[VolvoGirl]

Pretty sure it’s below and after the AGI.   Like the Standard Deduction or Itemized Deductions are subtracted from the AGI to give you taxable income.   

[rjs]

The language of the new law for charitable donations is very convoluted. It's not clear whether the deduction will be above the line or below the line. You can find expert opinions on both sides, and also expert discussions that skirt the question and don't say one way or the other. The IRS has not yet issued anything definitive. I think it is more likely to be below the line, like all of the other new deductions in the new tax law. We'll find out for sure later this year when the IRS starts publishing the forms for 2026.

[martinb0820]

I don't see it between the AGI and Taxable Income. Which line item was updated when you tried it?

Thanks!

[martinb0820]

A number of sources indicate that for a non-itemized return, cash charitable donations are above-the-line, i.e. subtracted from the AGI. One example: https://tax.thomsonreuters.com/news/a-tale-of-two-above-the-line-deductions/

However, in agreement with your comment, IRS Topic 506 doesn't actually say whether the deduction is subtracted from AGI or treated explicitly as a deduction after AGI in calculating Taxable Income.

In either case, if I am correctly interpreting IRS 506 (maybe I'm not...), Taxable Income should decrease by the amount of the contribution.

So apparently TurboTax ignored that tax law change in the WhatIf calculations for 2026 presumably until the IRS decides. I would have preferred that the What-If form contained a provisional line item (maybe color coded as a warning, with a pop-up to explain that it is provisional) rather than just ignore the tax law change. Or even just an explicit list of tax changes or situations that are not supported. The On-Demand Guidance for the What-If worksheet only says "The What-If Worksheet does not support all calculations that may be required for every tax situation."