Dis tax preparers: Q about the CARES Act and charitable deductions

[teller80]

I see that this year you do not need to go long form in order to deduct your charitable donations, but I don't understand what "above the line" means. Can someone explain it in simple terms? Sorry if this has been discussed before, and thank you!

 

[Skippy918]

That’s good to know. How did you find this out.
Above the line means you don’t have to itemize your deductions in order to take advantage of this specific one.

 

[_19disnA]

Unless something has changed recently, the official IRS website still shows you have to use long Form 1040 to claim charitable deductions.

 

[Allison]

What does this have to do with the CARES Act?

 

[SugarSweetLee]

What does this have to do with the CARES Act?

You may find this explanation helpful: https://blog.taxact.com/cares-act-new-300-charitable-contribution-tax-deduction/

 

[AlohaNow]

Interesting new development! I hadn't heard of this until today, though it was announced back in August. The Tax Act article above states that married filing jointly could deduct up to a combined $600 above the line, but Kiplinger's is stating even MFJ is limited to $300 in total. Since the 2020 tax forms and instructions aren't out yet, I guess we'll find out later exactly how it works. Thanks for posting this!

 

[Skippy918]

It looks like it’s really limited as to which organizations qualify. It’s only public charities and not any 501c3 organization.

 

[_19disnA]

^^ And probably a good idea to do some homework before donating to any 501c3 (i.e. 'non-profit') organization. If most of what you donate goes to overhead and paying inflated salaries of those who run the organization, probably best to give your money elsewhere. One of those abandoned/abused dog organizations running those pathetic looking TV commercials, spends 95% of the money they collect to pay salaries, virtually nothing goes to actually help the dogs in their ads.

I think many people would be surprised how much 'non-profits' pay their employees and assume they are all unpaid volunteers. Many are cleverly running a business that happens to be classified as a 'non-profit' for tax purposes.

 

[mara512]

You can take up to $300 total, regardless of filing status, charitable donation deduction as an adjustment to income. Also 501(C)3 organizations are either public charities or private foundations. This doesn’t disqualify the donation.

 

[Skippy918]

You can take up to $300 total, regardless of filing status, charitable donation deduction as an adjustment to income. Also 501(C)3 organizations are either public charities or private foundations. This doesn’t disqualify the donation.

How do you know if the 501c3 you donated to is a public charity? I’ve donated to several organizations this year like habitat for humanity and the local food bank.

 

[mara512]

How do you know if the 501c3 you donated to is a public charity? I’ve donated to several organizations this year like habitat for humanity and the local food bank.

Those are probably public charity. You can just ask the organization.
There is also a site to view 501 tax filings. It would be a noted on the first page of the filed 990. All 501c3 are tax deductible as long as they are in good standing. Digging deeper allows you to see where your donation is used.

 

[teller80]

It looks like it’s really limited as to which organizations qualify. It’s only public charities and not any 501c3 organization.

Do you think St. Jude Children's Hospital would qualify? It's my go to charity.

 

[teller80]

That’s good to know. How did you find this out.
Above the line means you don’t have to itemize your deductions in order to take advantage of this specific one.

I'm still not clear. Lets say my AGI is $50,000. Does that mean if I donate $300 it's now $49,700? Or does that mean if my tax obligation is $5,000 I can reduce the amount by $300 and only owe $4,700?

Appreciate your help, thank you!

 

[mara512]

I'm still not clear. Lets say my AGI is $50,000. Does that mean if I donate $300 it's now $49,700? Or does that mean if my tax obligation is $5,000 I can reduce the amount by $300 and only owe $4,700?

Appreciate your help, thank you!

St Jude is ok.
It be your total income, say $50,000 minus all of your qualified adjustments, donations $300, = your AGI.