Special charitable deduction for non-itemizers

[cathy63]

This provision of CARES didn't really get the publicity it should have. One thing to note, from the Kiplinger Tax Letter, is that the law is vague about what it means for couples filing jointly. The $300 limit may be "per return" so a married couple filing jointly (which most do) would be eligible to deduct only $300, not $600. I did a subsequent search on this and the issue hasn't really been resolved.

Agreed, but it is a nice gift for those of us who are using QCDs for our charitables. Doing QCDs lets us use the standard deduction which is substantially larger than the non-charitable deductions we can gather. So we make a profit on that. But there are always popcorn charitables/small checks that we can't/don't use QCDs for, so now we can deduct $300 or $600 of those.

I'm bumping this thread because the IRS has released draft instructions for the 2020 form 1040, and these instructions do limit the deduction to $300 for a married couple. The draft pub is here: https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

Line 10b
If you don't itemize deductions on Schedule A (Form 1040), you (or you and your spouse if filing jointly) can take a charitable deduction of up to $300 for cash contributions made in 2020 to organizations that are religious, charitable, educational, scientific, or literary in purpose. See Pub. 526 for more information on the types of organizations that qualify. A deduction can't be taken for a contribution to an organization described in IRC 509(a)(3) or for the establishment of a new, or maintenance of an existing, donor advised fund. Also, contributions of noncash property and contributions carried forward from prior years don't qualify for this deduction. See the Instructions for Schedule A and Pub. 526 for more information on those types of contributions. Enter the total amount of your contributions on line 10b. Don't enter more than $300.

 

[pb4uski]

Agreed that it is limited to $300 for either a single or a couple, but it is odd in that most other items like tax brackets, standard deductions, etc are broadly twice the single amount for a couple.

 

[Badger]

I was thinking of passing this info to a local "No Kill Animal Shelter" that is IRS recognized as 501(C)(3) status. They could really use the help so maybe they could let people know.
I just want to make sure it is alright for them. Any downsides?


Cheers!

 

[braumeister]

Great idea. No downsides.

 

[scrabbler1]

I'm bumping this thread because the IRS has released draft instructions for the 2020 form 1040, and these instructions do limit the deduction to $300 for a married couple. The draft pub is here: https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

I did a quick-and-dirty comparison between the recently finalized version of the 2020 form to the draft version and they look alike.

Sorry for the slight thread hijack, Cathy63.....

I also want to note that most of the remaining suggestions I made to Tax Advocate Nina Olson a few years ago were adopted this time. They include moving the Estimated Tax payments from Schedule 3 to the main form, and the elimination of the annoying process of adding unposted numbers from other forms to existing numbers on the main form. Now, all imported numbers are posted first and are indented, if necessary, like before 2018.

Now if they can move the ACA Subsidy (or repayment) numbers back to the main form instead of copying them to separate schedules first...….

Another handy change was to separate the W-2 and 1099 tax withholding payments onto separate lines before adding them together. (I didn't suggest it to Ms. Olson.)

 

[jebmke]

I did a quick-and-dirty comparison between the recently finalized version of the 2020 form to the draft version and they look alike.



Now if they can move the ACA Subsidy (or repayment) numbers back to the main form instead of copying them to separate schedules first...….

We are only a few moves away from getting back to the old 1040 which was superior to the new booklet of forms that is filed.

 

[CDRE]

I realize that the 2020 H&R Block software clearly states that an update is forthcoming January 4th but the version today does not bring this special charitable deduction from the background into the 1040 Form. So it is not included.



For folks that use this software version to manage MAGI for ACA cliff (or other) purposes, be aware because the cliff is, well, a big cliff.

 

[cathy63]

We are only a few moves away from getting back to the old 1040 which was superior to the new booklet of forms that is filed.

Yeah, there really was nothing wrong with the 1040-EZ approach for people who have simple taxes that can fit on a postcard, while still providing a full 1040 for those of us who have more complex tax situations. I expect we'll see something like that again.

 

[PatrickA5]

I realize that the 2020 H&R Block software clearly states that an update is forthcoming January 4th but the version today does not bring this special charitable deduction from the background into the 1040 Form. So it is not included.



For folks that use this software version to manage MAGI for ACA cliff (or other) purposes, be aware because the cliff is, well, a big cliff.

Turbotax is the same. I can input the charitable contribution, but it doesn't show up on the 1040.

Also, still nothing on that stimulus reconciliation that I can see. I should be getting a few hundred more refund due to not qualifying for the full amount based on 2019 income.

This will probably be one of those years where updates continue for some time.

 

[cathy63]

Turbotax is the same. I can input the charitable contribution, but it doesn't show up on the 1040.

Also, still nothing on that stimulus reconciliation that I can see. I should be getting a few hundred more refund due to not qualifying for the full amount based on 2019 income.

This will probably be one of those years where updates continue for some time.

If you don't mind doing the calculation yourself, the worksheet for stimulus reconciliation is in the 1040 instructions on the IRS website. It's called "Recovery Rebate Credit" there, and the amount goes on line 30 of your 1040. You might be able to enter the credit in TurboTax manually in Forms Mode (Ctrl+2 or Cmd+2) even if they haven't implemented the worksheet yet. I don't have TTax 2020 yet, so can't verify this.

I'm guessing the charitable contribution you can enter in the TTax interview is the one that goes on Sched A. You could also try entering the $300 directly through Forms Mode. It goes on line 10b of the 1040.

 

[scrabbler1]

Yeah, there really was nothing wrong with the 1040-EZ approach for people who have simple taxes that can fit on a postcard, while still providing a full 1040 for those of us who have more complex tax situations. I expect we'll see something like that again.

This is part of what I told Nina Olson back in 2019, and how the new forms made it a lot tougher (though a little easier in 2020 for the 2019 return) for me to complete a "postcard" 1040EZ for my friend.

 

[Golden sunsets]

I realize that the 2020 H&R Block software clearly states that an update is forthcoming January 4th but the version today does not bring this special charitable deduction from the background into the 1040 Form. So it is not included.



For folks that use this software version to manage MAGI for ACA cliff (or other) purposes, be aware because the cliff is, well, a big cliff.

Glad to see this CDRE. We do not itemize and I could not find a place to enter charitable donations outside of Schedule B, for non itemizezers. Now I know that the H&R Block form has not yet incorporated it. Thanks.

 

[cathy63]

I'm bumping this thread because the IRS has released draft instructions for the 2020 form 1040, and these instructions do limit the deduction to $300 for a married couple. The draft pub is here: https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

Bumping this again to point out that for those planning ahead, the new relief act that includes the second stimulus payment also raises the charitable deduction to $600 for a married couple in tax year 2021. The limit for 2020 remains at $300.

In the case of any taxable year beginning in 2021, if the individual does not elect to itemize deductions for such taxable year, the deduction under this section shall be equal to the deduction, not in excess of $300 ($600 in the case of a joint return), which would be determined under this section if the only charitable contributions taken into account in determining such deduction were contributions made in cash during such taxable year...

 

[audreyh1]

And this special charitable deduction is for 2021 only?

 

[cathy63]

And this special charitable deduction is for 2021 only?

Yes, it specifically says "taxable year beginning in 2021", and it still excludes DAFs.

 

[audreyh1]

So after 2021, no more “above the line” charitable deductions.

 

[donheff]

DD qualifies. She and her husband will get $660x2 based on her 2019 return. But she had a baby in August. I wonder if she will get credited with the 3rd when she files her 2020 return.

 

[jebmke]

And this special charitable deduction is for 2021 only?

There is a $300 for 2020 returns; it is the same for single or married filing jointly. In 2021, the amount for MFJ is boosted to $600. After 2021, unless they extend it through new legislation, the above the line deduction goes away.