Qualified 100% Charitable Contributions line 11

[Johnl777]

I entered 2020 qualified charitable deductions on Schedule A input sheet using type code C for 100% deduction, and return was computed and efiled correctly. Now IRS has sent client tax due notice, where they are treating all subject to 60% AGI limit.  Apparently ProSeries should have entered the amount of qualified deduction also on the "dotted line" next to line 11 for the same amount in order to make a valid "election", but didn't. Anyone else run into this, and if so how to reply to the IRS CP11 notice. Calling IRS may not be practical.  Think  an amended return?  Or just try to explain to notice  why we disagree. Only  option per notice is to call IRS.  Did ProSeries let us down on this? Thanks.

[PATAX]

I am not sure my friend, if it was an intuit or Pro Series issue one would think that others would have experienced this by now this late into the extended tax season but I haven't seen any other post like this so I don't know...

[TaxGuyBill]

I've seen this on other forums.  Yes, Intuit screwed up yet again and didn't do what is required.

I would reply to the IRS notice that it is a 100% charity, but your defective Intuit software did not include the required notation.  In that response, you can ask if they want an amended return, but I suspect that they will just fix it via that response.

The IRS is rather slow at responding, so expect it to take a long time to resolve.

[PATAX]

Thanks for the information Bill.... Now I will know what to say if a client gets a notice and calls... What a joke...

[DanCoc]

Hi John, I just received an IRS letter for a client that is also having their charitable contribution deduction "corrected".  Appears to be the same problem with the 100% (even though I selected that option in the software) not appearing on the dotted line as an election.  Before I contact the IRS, do you have any update on your situation?  Any luck with contacting the IRS and getting them to accept the 100%.

Thanks, Dan

[Johnl777]

DanCoc,

No luck contacting IRS. I had my client set up online accounts for him and spouse with IRS; then I electronically filed Form 2848 POA to represent him, but he has yet to get online notice of such. I also efiled a 2020 Form 1040-X amended return on 9/3/21... no acknowledgment of receipt from IRS yet other than efile acceptance from ProSeries. I had no entries of p. 1; only filled out Part III on p.2 of 1040-X explaining what happened and attached PDF of Schedule A with contribution amount on dotted line next to line 11 for qualified 100% deductible contributions. When called IRS, I only got collections dept, they extended due date of amount due about 7-8 weeks, but could not comment on Sch A... so that is why I efiled the 1040-X. Client is not happy. Efiling the 2848 was supposed to be fast, but done on 9/24/21, but no indication of such sent to client IRS accounts yet. My hope is to get POA, then try to call. But calling is not a good option.

[DanCoc]

Thank you very much for the detailed reply.  Looks like filing the Amended return with the Sch A showing the missing amount next to Line 11 is the best next course of action.

[Elizabeth Hutchison]

I just received a CP11 for the same issue, but we had the elected amount on the line.

[PATAX]

What a joke... Sounds like an i r s Nightmare on Intoit Street...

[sjrcpa]

@Johnl777 IRS is taking 60 days to process 2848s -no matter how they received them. Fax, electronic and paper are processed in the order received, they say.

[PATAX]

@sjrcpa thanks for the information

[DanCoc]

Just as a follow up to my client's situation, I call PPS and they agreed to make the change (correction) for the Schedule A, Line 11 election over the phone.  I did this a couple of weeks ago.  Neither my client nor I have received a follow up letter yet, I was told we would get one, but it is still probably too early to expect that.  

[KREAD67230]

Hi.   I dealt with this issue with a client and we had to get our senator involved.  The IRS never updated their software for the 100% charitable deduction, so it was automatically rejecting those.   It was fixed last fall and it took until this spring for my client to get her full refund, but it was finally fixed.

[Johnl777]

Thanks for the reply. My client's was adjusted with an amended return, but they ended up charging him $140 more the investment income tax, which somehow they didn't figure correctly. Called IRS several times and they said should be corrected when the amended return was finally processed. Apparently not closed yet. Client kept getting notices and accrued interest, so he paid it since not worth the headache of waiting and seeing the tax go up each month. Not right, but felt like this was best since processing backlogged. The 1040-X was efiled, but still not closed out. Someone must have made a manual adjustment after all my phone calls, but forgot about the NIIT, which was the same before and after the amendment. Oh well. Maybe he get the $140 back in a year or so. 🙂

[Just Jim]

I am having same problem getting IRS to accept the qualified contribution at 100% of AGI.  They first denied on notice dated in Sept of 2021. We promptly responded with worksheets, etc and a printed copy of Sch A showing the election on the dotted line.  They didn't respond to our reply until March of 2022 and that was only to inform us that they needed more time.  Now on June 6, 2022 their response was that there decision stands.  (effectively limited to 60% of AGI) I have noticed several suggestions to amend the return to get this done.  Can this election be made on an amended return after the extended due date of the original return?  

[Johnl777]

Yes Jim, I chose to amend the return and emphasize all contributions made in  2020 were qualified for the 100% AGI limit and attached a new Schedule A with the amount on the dotted line. However, processing  has been extremely slow from IRS: taxpayer just 2 weeks ago got a letter stating they looked at the 1040X and nothing further needed from him. I, however, wrote a letter to IRS as if from the taxpayer, and replied to IRS that they still owed the taxpayer for the net investment income tax which somehow they charged him twice for, when they  adjusted for the contributions. So contributions were apparently adjusted to 100% limit, however, they must have manually made the adjustment and in so doing, charged him for the NIIT twice, plus interest. Not material as for amount, but just not right. What a mess! Still I suggest the 1040X route looks best way to me. Hope it works out. Too many clerks and not enough higher ups to put the pieces together.