Cars Act above the line charitable donation

[Terry53029]

Just for everyone's info, it seems the new above the line deduction is $300. Here is what the official doc. says, and here is link: 

https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+actualizaci%C3%B3n#toc-...

SEC. 2104. ALLOWANCE OF PARTIAL ABOVE THE LINE DEDUCTION FOR CHARITABLE CONTRIBUTIONS.

(a) In General.—Section 62(a) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (21) the following new paragraph:

“(22) CHARITABLE CONTRIBUTIONS.—In the case of taxable years beginning in 2020, the amount (not to exceed $300) of qualified charitable contributions made by an eligible taxpayer during the taxable year .”.

[Just-Lisa-Now-]

Eligible taxpayer...so I guess a spouse isn't eligible?

[Terry53029]

Have to look at possibility of comparing MFS vs MFJ

[itonewbie]

The JCT explanation of Sec. 62(f)(1) in relation to eligible individual, in the form of footnote (#76), is very clear the $300 limit is applicable to a tax-filing unit.  In other words, it is the same whether the return is filed as MFJ or MFS.

Sec. 62(f)(1). The $300 limit applies to the tax-filing unit. Thus, for example, married taxpayers who file a joint return and do not elect to itemize deductions are allowed to deduct up to a total of $300 in qualified charitable contributions on the joint return.

[itonewbie]

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@Terry53029 wrote:

Have to look at possibility of comparing MFS vs MFJ

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If we look at the above-the-line deduction for charitable contributions in isolation, that will likely not move the needle.  In fact, filing MFS for just that would likely be disadvantageous, everything else being equal, when other tax effects as well as additional tax prep fees are taken into account.

[abctax55]

@Terry53029  - What is this *Cars* Act you are referring to?  I haven't done my tax refresher course yet; looks like I missed something.  🤣

[Just-Lisa-Now-]

and it's cash only contributions, no in-kind donations.

[BobKamman]

@itonewbie  In fact, filing MFS for just that would likely be disadvantageous, everything else being equal, when other tax effects as well as additional tax prep fees are taken into account.

True, except those of us in the business tend to overlook the 70 million or so people who prepared their own returns for 2019.  (The number is higher than the 57 million for 2018, because of the EIP returns.)  There will be media reports about how you can save $75 or so by filing separately, and those who are OCD about tax preparation will try it.  Many of them may get it right. 

And then there is my client whose AGI was something like $85,200 in the year when the cutoff for higher Medicare premiums was $85,000.  Another $300 above the line for her (and I'm not sure this actually goes to AGI, I am still looking at 2019 returns) would have saved her about $800.  Sometimes, not everything else is equal.  

[itonewbie]

@BobKammanGood point.  There will always be narrow groups of folks who could benefit, like in the case you cited.

[Ephesians3-14]

So, the idea is that if you are not itemizing, then you can deduct $300 above the line? I don't see a line item for that on Sched 1? Not in the software yet?

[qbteachmt]

"I don't see a line item for that on Sched 1?"

1040, line 10b.

https://www.irs.gov/pub/irs-dft/f1040--dft.pdf