CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Random Poster
Posts: 2182
Joined: Wed Feb 03, 2010 10:17 am

CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by Random Poster » Thu Apr 09, 2020 11:13 am

Section 2204 of the CARES Act amended the Internal Revenue Code by adding new § 62(a)(22) thereto, thereby allowing taxpayers who do not itemize deductions to deduct up to $300 for certain charitable gifts made in 2020.

Everything I've read from accounting websites essentially restates the above statement, limiting the deduction to a flat $300, with no qualification regarding what the amount is for those who file taxes as married filing jointly.

But most charity websites go further, with most of them stating that the deduction is $300 for an individual or $600 for those married filing jointly.

My hunch is that the charity websites interpretation is correct, but does anyone know if this new above-the-line deduction is, in fact, increased to $600 for a married filing jointly filer?

Thanks.

User avatar
Flobes
Posts: 1293
Joined: Tue Feb 16, 2010 12:40 am
Location: Home

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by Flobes » Thu Apr 09, 2020 11:34 am

Here's the relevant section of the legislation:
SEC. 2204. 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 individual during the taxable year.”.
(b) DEFINITIONS.—Section 62 of such Code is amended by adding at the end the following new subsection:
“(f) DEFINITIONS RELATING TO QUALIFIED CHARITABLE CONTRIBUTIONS.—For purposes of subsection (a)(22)—

“(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible individual’ means any individual who does not elect to itemize deductions.
“(2) QUALIFIED CHARITABLE CONTRIBUTIONS.—The term ‘qualified charitable contribution’ means a charitable contribution (as defined in section 170(c))—
“(A) which is made in cash,
“(B) for which a deduction is allowable under section 170 (determined without
regard to subsection (b) thereof), and “(C) which is—
“(i) made to an organization described in section 170(b)(1)(A), and “(ii) not—
“(I) to an organization described in section 509(a)(3), or
“(II) for the establishment of a new, or maintenance of an existing, donor
advised fund (as defined in section 4966(d)(2)).
Such term shall not include any amount which is treated as a charitable contribution made in such taxable year by reason of subsection (b)(1)(G)(ii) or (d) (1) of section 170.”.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2019.

kaneohe
Posts: 6499
Joined: Mon Sep 22, 2008 12:38 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by kaneohe » Thu Apr 09, 2020 11:37 am

don't know the real answer but would be more inclined to believe the accountants than the charities who may wishfully be thinking ........and you're the one who takes the consequences.

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by FiveK » Fri Apr 10, 2020 10:43 am

Good question. Don't know the answer. Some reasons to think one way vs. another:
- Two MFS returns would each be able to take a $300 if not itemizing. MFS rules are rarely (never?) more favorable than MFJ, so MFJ should get $600.
- The IRA adjustment in §219(f)(2) specifically addresses "married individuals." The charitable adjustment language does not, so MFJ gets only $300.

So, ...?

User avatar
ObliviousInvestor
Posts: 3696
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by ObliviousInvestor » Wed Apr 15, 2020 10:11 am

As far as I can tell, it would be $600 if married filing jointly.

The CARES Act adds a new paragraph (22) to IRC 62(a). IRC 62 is the section that defines adjusted gross income. You can find it here:
https://www.law.cornell.edu/uscode/text/26/62

Note that it explains what adjusted gross income is for an individual. It doesn't say anything about married couples (except for the special rules for qualified performing artists).

And, with all of the other deductions listed in 62(a), when dealing with a married couple filing jointly, we simply add up the 62(a) deductions that Spouse A gets and the 62(a) deductions that Spouse B gets. For example, if they're both sole proprietors, we wouldn't hesitate at all to say that they can each claim their business-related deductions under 62(a)(1).

It seems to me that this new 62(a)(22) $300 deduction would work similarly, in the absence of language to the contrary.

As a separate matter, given the absence of language about spouses, if a couple were wanting to donate any amount above $300, I'd encourage them to split the contribution (e.g., $200 each for a $400 total contribution) rather than one person contributing the entire amount. Though if I'm right about the above point with it being a $600 combined limit (and I might not be right) I wouldn't be surprised to see regulations from Treasury allowing spouses to combine the calculation.
Mike Piper, author/blogger

User avatar
samsoes
Posts: 1462
Joined: Tue Mar 05, 2013 9:12 am
Location: Northeast Rat Race

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by samsoes » Wed Apr 15, 2020 10:27 am

Does the $300 "above the line" deduction reduce AGI (as does a CD early withdraw penalty), or is the $300 reduction applied after the AGI line (where taxable income is being calculated but above it)?

I'm asking since AGI is the focal point of the ACA premium tax credit calculation.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

User avatar
ObliviousInvestor
Posts: 3696
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by ObliviousInvestor » Wed Apr 15, 2020 10:31 am

samsoes wrote:
Wed Apr 15, 2020 10:27 am
Does the $300 "above the line" deduction reduce AGI (as does a CD early withdraw penalty), or is the $300 reduction applied after the AGI line (where taxable income is being calculated but above it)?

I'm asking since AGI is the focal point of the ACA premium tax credit calculation.
Above the line deductions reduce AGI. That's what is meant by "above the line" (i.e., they appear before the AGI line on Form 1040).

Some above the line deductions are added back when calculating MAGI. (And MAGI has many different definitions, as the add-backs are different for different provisions.) But the text of the CARES Act does not have any wording about the new 62(a)(22) deduction being added back for any other calculations.
Mike Piper, author/blogger

SimonJester
Posts: 2134
Joined: Tue Aug 16, 2011 12:39 pm

CARES Act Charitable Giving Incentives Deduction

Post by SimonJester » Tue Apr 21, 2020 12:08 pm

[Thread merged into here, see below. --admin LadyGeek]

So I read that part of the CARES Act allows those that take the standard deduction to claim an additional $300 Deduction for Charitable Donations. As I understand this is doubled for Married Filing Jointly.

Can anyone confirm this?
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

Skiandswim
Posts: 147
Joined: Tue Dec 21, 2010 3:24 pm

Re: CARES Act Charitable Giving Incentives Deduction

Post by Skiandswim » Tue Apr 21, 2020 12:15 pm

Good explanation of incentive from Make-A-Wish: https://wish.org/stimulus
Yes, $600 for married couple that use standard deductions (versus itemized deductions)

Topic Author
Random Poster
Posts: 2182
Joined: Wed Feb 03, 2010 10:17 am

Re: CARES Act Charitable Giving Incentives Deduction

Post by Random Poster » Tue Apr 21, 2020 12:38 pm

Asked and sorta answered here:

viewtopic.php?f=2&t=311331

jebmke
Posts: 10902
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: CARES Act Charitable Giving Incentives Deduction

Post by jebmke » Tue Apr 21, 2020 1:46 pm

Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
When you discover that you are riding a dead horse, the best strategy is to dismount.

User avatar
LadyGeek
Site Admin
Posts: 63961
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by LadyGeek » Tue Apr 21, 2020 3:12 pm

I merged SimonJester's thread into the on-going discussion.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Swimmer
Posts: 391
Joined: Tue Dec 29, 2015 4:24 pm

Re: CARES Act Charitable Giving Incentives Deduction

Post by Swimmer » Tue Apr 21, 2020 4:23 pm

jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Just yesterday, I searched for this on the IRS website with no success. Likely operator error.

jebmke
Posts: 10902
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: CARES Act Charitable Giving Incentives Deduction

Post by jebmke » Tue Apr 21, 2020 5:10 pm

Swimmer wrote:
Tue Apr 21, 2020 4:23 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Just yesterday, I searched for this on the IRS website with no success. Likely operator error.
probably very few people at IRS working on anything but pumping out stimulus payments.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Alan S.
Posts: 9690
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: CARES Act Charitable Giving Incentives Deduction

Post by Alan S. » Tue Apr 21, 2020 6:18 pm

jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Amended on 4/24/20:

Per a footnote in the Joint Committee Report on the CARES Act, the footnote is self explanatory:
76 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.
Last edited by Alan S. on Fri Apr 24, 2020 7:54 pm, edited 2 times in total.

User avatar
WoodSpinner
Posts: 1493
Joined: Mon Feb 27, 2017 1:15 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by WoodSpinner » Tue Apr 21, 2020 8:27 pm

Flobes wrote:
Thu Apr 09, 2020 11:34 am
Here's the relevant section of the legislation:
SEC. 2204. 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 individual during the taxable year.”.
(b) DEFINITIONS.—Section 62 of such Code is amended by adding at the end the following new subsection:
“(f) DEFINITIONS RELATING TO QUALIFIED CHARITABLE CONTRIBUTIONS.—For purposes of subsection (a)(22)—

“(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible individual’ means any individual who does not elect to itemize deductions.
“(2) QUALIFIED CHARITABLE CONTRIBUTIONS.—The term ‘qualified charitable contribution’ means a charitable contribution (as defined in section 170(c))—
“(A) which is made in cash,
“(B) for which a deduction is allowable under section 170 (determined without
regard to subsection (b) thereof), and “(C) which is—
“(i) made to an organization described in section 170(b)(1)(A), and “(ii) not—
“(I) to an organization described in section 509(a)(3), or
“(II) for the establishment of a new, or maintenance of an existing, donor
advised fund (as defined in section 4966(d)(2)).
Such term shall not include any amount which is treated as a charitable contribution made in such taxable year by reason of subsection (b)(1)(G)(ii) or (d) (1) of section 170.”.
(c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2019.
I know I am not the brightest guy here, but DOES THIS ANSWER THE QUESTION? I honestly can’t tell....

Alan S.
Posts: 9690
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: CARES Act Charitable Giving Incentives Deduction

Post by Alan S. » Fri Apr 24, 2020 7:53 pm

Alan S. wrote:
Tue Apr 21, 2020 6:18 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Amended on 4/24/20:
Per a footnote in the Joint Committee Report on the CARES Act, the footnote is self explanatory:
76 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.
Therefore, it appears that $300 is the max deduction on an individual or joint return.

User avatar
ObliviousInvestor
Posts: 3696
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: CARES Act Charitable Giving Incentives Deduction

Post by ObliviousInvestor » Fri Apr 24, 2020 8:08 pm

Alan S. wrote:
Fri Apr 24, 2020 7:53 pm
Alan S. wrote:
Tue Apr 21, 2020 6:18 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Amended on 4/24/20:
Per a footnote in the Joint Committee Report on the CARES Act, the footnote is self explanatory:
76 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.
Therefore, it appears that $300 is the max deduction on an individual or joint return.
Wow. Consider me surprised. Thank you for posting this.

Here's the link for anybody interested (page 22):
https://www.jct.gov/publications.html?f ... wn&id=5256
Mike Piper, author/blogger

User avatar
Stinky
Posts: 4448
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by Stinky » Sat Apr 25, 2020 6:52 am

FiveK wrote:
Fri Apr 10, 2020 10:43 am
Good question. Don't know the answer. Some reasons to think one way vs. another:
- Two MFS returns would each be able to take a $300 if not itemizing. MFS rules are rarely (never?) more favorable than MFJ, so MFJ should get $600.
- The IRA adjustment in §219(f)(2) specifically addresses "married individuals." The charitable adjustment language does not, so MFJ gets only $300.

So, ...?
Good points. I could have taken either side of this argument.

From previous posts in this thread, it looks like the $300 limitation also applies to married taxpayers filing jointly.

Who says that the tax code is entirely rational? Or is even internally consistent?
It's a GREAT day to be alive - Travis Tritt

Topic Author
Random Poster
Posts: 2182
Joined: Wed Feb 03, 2010 10:17 am

Re: CARES Act Charitable Giving Incentives Deduction

Post by Random Poster » Sat Apr 25, 2020 11:07 am

Alan S. wrote:
Fri Apr 24, 2020 7:53 pm
Alan S. wrote:
Tue Apr 21, 2020 6:18 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Amended on 4/24/20:
Per a footnote in the Joint Committee Report on the CARES Act, the footnote is self explanatory:
76 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.
Therefore, it appears that $300 is the max deduction on an individual or joint return.
Thanks for the update.

Clearly my hunch, and that of the charities’, was wrong.

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by FiveK » Sat Apr 25, 2020 11:15 am

Stinky wrote:
Sat Apr 25, 2020 6:52 am
Who says that the tax code is entirely rational? Or is even internally consistent?
Not I. ;)

Kookaburra
Posts: 164
Joined: Thu Apr 02, 2020 11:14 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by Kookaburra » Sat Apr 25, 2020 11:30 am

Do the charitable contributions have to be in the form of cash to qualify for the CARES Act above-the-line deduction?

Would donations of household items to goodwill qualify for this deduction?

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by FiveK » Sat Apr 25, 2020 11:49 am

Kookaburra wrote:
Sat Apr 25, 2020 11:30 am
Do the charitable contributions have to be in the form of cash to qualify for the CARES Act above-the-line deduction?
Yes. See the actual language that includes "(A) which is made in cash," a few posts back.

User avatar
arcticpineapplecorp.
Posts: 5281
Joined: Tue Mar 06, 2012 9:22 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by arcticpineapplecorp. » Wed May 06, 2020 12:06 pm

this may be a stupid question, but if someone does a QCD the amount of the QCD reduces the RMD that's taxable. So if an RMD is $1000 but someone does a QCD say of $400 it only makes $600 of the RMD taxable income.

Under the CARES act, is the $300 (of the $400 in the example above) ALSO able to be claimed as a charitable deduction that would normally be done if itimizing?

If yes, is that double dipping/counting? As it would reduce the income twice on the same deduction?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

User avatar
ObliviousInvestor
Posts: 3696
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by ObliviousInvestor » Wed May 06, 2020 12:35 pm

arcticpineapplecorp. wrote:
Wed May 06, 2020 12:06 pm
this may be a stupid question, but if someone does a QCD the amount of the QCD reduces the RMD that's taxable. So if an RMD is $1000 but someone does a QCD say of $400 it only makes $600 of the RMD taxable income.

Under the CARES act, is the $300 (of the $400 in the example above) ALSO able to be claimed as a charitable deduction that would normally be done if itimizing?

If yes, is that double dipping/counting? As it would reduce the income twice on the same deduction?
The new $300 62(a)(22) deduction is only for contributions "for which a deduction is allowable under section 170 (determined without regard to subsection (b) thereof)" -- that is, contributions for which you could claim an itemized deduction, ignoring the percentage-of-income limitations.

But you cannot claim itemized deductions for QCDs per 408(d)(8)(E). So no $300 above the line deduction for QCDs.

Edited to fix broken link.
Last edited by ObliviousInvestor on Wed May 06, 2020 12:45 pm, edited 1 time in total.
Mike Piper, author/blogger

User avatar
arcticpineapplecorp.
Posts: 5281
Joined: Tue Mar 06, 2012 9:22 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by arcticpineapplecorp. » Wed May 06, 2020 12:39 pm

ObliviousInvestor wrote:
Wed May 06, 2020 12:35 pm
arcticpineapplecorp. wrote:
Wed May 06, 2020 12:06 pm
this may be a stupid question, but if someone does a QCD the amount of the QCD reduces the RMD that's taxable. So if an RMD is $1000 but someone does a QCD say of $400 it only makes $600 of the RMD taxable income.

Under the CARES act, is the $300 (of the $400 in the example above) ALSO able to be claimed as a charitable deduction that would normally be done if itimizing?

If yes, is that double dipping/counting? As it would reduce the income twice on the same deduction?
The new $300 62(a)(22) deduction is only for contributions "for which a deduction is allowable under section 170 (determined without regard to subsection (b) thereof)" -- that is, contributions for which you could claim an itemized deduction, ignoring the percentage-of-income limitations.

But you cannot claim itemized deductions for QCDs per 408(d)(8)(E). So no $300 above the line deduction for QCDs.
thank you Mike. To follow up, if someone already did QCD (my mom did $800 earlier in the year), can she now make another $300 contribution (straight check written, not another QCD from IRA) to a charity and get the $300 above the line tax deduction?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

User avatar
ObliviousInvestor
Posts: 3696
Joined: Tue Mar 17, 2009 9:32 am
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by ObliviousInvestor » Wed May 06, 2020 12:47 pm

arcticpineapplecorp. wrote:
Wed May 06, 2020 12:39 pm
ObliviousInvestor wrote:
Wed May 06, 2020 12:35 pm
arcticpineapplecorp. wrote:
Wed May 06, 2020 12:06 pm
this may be a stupid question, but if someone does a QCD the amount of the QCD reduces the RMD that's taxable. So if an RMD is $1000 but someone does a QCD say of $400 it only makes $600 of the RMD taxable income.

Under the CARES act, is the $300 (of the $400 in the example above) ALSO able to be claimed as a charitable deduction that would normally be done if itimizing?

If yes, is that double dipping/counting? As it would reduce the income twice on the same deduction?
The new $300 62(a)(22) deduction is only for contributions "for which a deduction is allowable under section 170 (determined without regard to subsection (b) thereof)" -- that is, contributions for which you could claim an itemized deduction, ignoring the percentage-of-income limitations.

But you cannot claim itemized deductions for QCDs per 408(d)(8)(E). So no $300 above the line deduction for QCDs.
thank you Mike. To follow up, if someone already did QCD (my mom did $800 earlier in the year), can she now make another $300 contribution (straight check written, not another QCD from IRA) to a charity and get the $300 above the line tax deduction?
Having made a QCD in the same year would not prevent being able to take a deduction for a separate charitable contribution. So, "yes," provided that she meets the other requirements.
Mike Piper, author/blogger

User avatar
arcticpineapplecorp.
Posts: 5281
Joined: Tue Mar 06, 2012 9:22 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by arcticpineapplecorp. » Wed May 06, 2020 12:49 pm

ObliviousInvestor wrote:
Wed May 06, 2020 12:47 pm
arcticpineapplecorp. wrote:
Wed May 06, 2020 12:39 pm
ObliviousInvestor wrote:
Wed May 06, 2020 12:35 pm
arcticpineapplecorp. wrote:
Wed May 06, 2020 12:06 pm
this may be a stupid question, but if someone does a QCD the amount of the QCD reduces the RMD that's taxable. So if an RMD is $1000 but someone does a QCD say of $400 it only makes $600 of the RMD taxable income.

Under the CARES act, is the $300 (of the $400 in the example above) ALSO able to be claimed as a charitable deduction that would normally be done if itimizing?

If yes, is that double dipping/counting? As it would reduce the income twice on the same deduction?
The new $300 62(a)(22) deduction is only for contributions "for which a deduction is allowable under section 170 (determined without regard to subsection (b) thereof)" -- that is, contributions for which you could claim an itemized deduction, ignoring the percentage-of-income limitations.

But you cannot claim itemized deductions for QCDs per 408(d)(8)(E). So no $300 above the line deduction for QCDs.
thank you Mike. To follow up, if someone already did QCD (my mom did $800 earlier in the year), can she now make another $300 contribution (straight check written, not another QCD from IRA) to a charity and get the $300 above the line tax deduction?
Having made a QCD in the same year would not prevent being able to take a deduction for a separate charitable contribution. So, "yes," provided that she meets the other requirements.
thanks Mike! You're great. I'll let her know. Much appreciated.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

pshonore
Posts: 6842
Joined: Sun Jun 28, 2009 2:21 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by pshonore » Wed May 06, 2020 3:02 pm

So would an MFS filer be limited to $150? (similar to cap loss and DCFSA contributions which are limited to 50% of the MFJ amount))

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by FiveK » Wed May 06, 2020 3:23 pm

pshonore wrote:
Wed May 06, 2020 3:02 pm
So would an MFS filer be limited to $150? (similar to cap loss and DCFSA contributions which are limited to 50% of the MFJ amount))
"The $300 limit applies to the tax-filing unit." Seems MFS, single, HOH, and MFJ all get the $300 limit, but make of that what you will. :confused

User avatar
Harry Livermore
Posts: 393
Joined: Thu Apr 04, 2019 5:32 am

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by Harry Livermore » Thu May 07, 2020 5:34 am

Stinky wrote:
Sat Apr 25, 2020 6:52 am

Who says that the tax code is entirely rational? Or is even internally consistent?
No one.
:sharebeer
Cheers

Rainmaker41
Posts: 541
Joined: Tue Apr 26, 2016 11:34 am

$300 deduction for charitable donations - how much if married filing joint?

Post by Rainmaker41 » Wed Jun 24, 2020 7:47 pm

[Thread merged into here, see below. --admin LadyGeek]

Does the CARES Act allow those with married filing joint tax returns to deduct $600 in charitable donations if not itemizing?

Some sources say the individual amount is doubled to $600, some say the $300 applies per tax return, and some say the law is unclear with IRS guidance and/or Congressional clarification needed, for example:

https://www.philanthropy.com/article/Ho ... 300/248523

I read the text of the applicable section of the law itself and could not work it out. Any ideas?

This is a trivial matter, but still an interesting puzzle I guess.

sailaway
Posts: 1662
Joined: Fri May 12, 2017 1:11 pm

Re: $300 deduction for charitable donations - how much if married filing joint?

Post by sailaway » Wed Jun 24, 2020 8:02 pm

The general consensus is that it is a flat $300 per return, not per tax payer.

It is always possible we will get clarification during tax filing season.

02nz
Posts: 4891
Joined: Wed Feb 21, 2018 3:17 pm

Re: $300 deduction for charitable donations - how much if married filing joint?

Post by 02nz » Wed Jun 24, 2020 8:08 pm

sailaway wrote:
Wed Jun 24, 2020 8:02 pm
The general consensus is that it is a flat $300 per return, not per tax payer.

It is always possible we will get clarification during tax filing season.
Full text of law: https://assets.documentcloud.org/docume ... es-act.pdf

SEC. 2204. 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 individual during the taxable year.’’

Certainly reads like $600 for a couple to me.

User avatar
LadyGeek
Site Admin
Posts: 63961
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by LadyGeek » Wed Jun 24, 2020 8:17 pm

I merged Rainmaker41's question into a similar discussion.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: $300 deduction for charitable donations - how much if married filing joint?

Post by FiveK » Wed Jun 24, 2020 8:55 pm

02nz wrote:
Wed Jun 24, 2020 8:08 pm
Certainly reads like $600 for a couple to me.
See this post for the apparently definitive answer.

jjface
Posts: 3037
Joined: Thu Mar 19, 2015 6:18 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by jjface » Wed Jun 24, 2020 9:29 pm

How authoritative/legal is the guidance? I mean it is pretty clear the text of the CARES Act /Tax Code refers to an "eligible individual" so the guidance put forward of it being limited to the "tax unit" sounds bonkers and just a misrepresentation of the law. Unless I am missing some case law that already defined an eligible individual to be a tax unit which would be odd.

User avatar
FiveK
Posts: 9317
Joined: Sun Mar 16, 2014 2:43 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by FiveK » Wed Jun 24, 2020 10:13 pm

jjface wrote:
Wed Jun 24, 2020 9:29 pm
How authoritative/legal is the guidance? I mean it is pretty clear the text of the CARES Act /Tax Code refers to an "eligible individual" so the guidance put forward of it being limited to the "tax unit" sounds bonkers and just a misrepresentation of the law. Unless I am missing some case law that already defined an eligible individual to be a tax unit which would be odd.
See this post for a link to the document Alan S. referenced.

The authors of the document were probably some of those who wrote the law so, bonkers or not, one would expect the IRS to follow that guidance.

User avatar
whodidntante
Posts: 8353
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: CARES Act Charitable Giving Incentives Deduction

Post by whodidntante » Wed Jun 24, 2020 10:20 pm

jebmke wrote:
Tue Apr 21, 2020 5:10 pm
Swimmer wrote:
Tue Apr 21, 2020 4:23 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Just yesterday, I searched for this on the IRS website with no success. Likely operator error.
probably very few people at IRS working on anything but pumping out stimulus payments.
They are working on clawing back stimulus payments made to prisoners. Busy, busy!

User avatar
whodidntante
Posts: 8353
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: CARES Act Charitable Giving Incentives Deduction

Post by whodidntante » Wed Jun 24, 2020 10:24 pm

Alan S. wrote:
Tue Apr 21, 2020 6:18 pm
jebmke wrote:
Tue Apr 21, 2020 1:46 pm
Has anyone seen anything authoritative (ie. IRS) that the $300 is per taxpayer (therefore $600 for MFJ)?
Amended on 4/24/20:

Per a footnote in the Joint Committee Report on the CARES Act, the footnote is self explanatory:
76 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.
I can't say that I enjoy being referred to as a tax-filing unit. But it's not the worst thing I've been called, and at least it is fair. :D

jjface
Posts: 3037
Joined: Thu Mar 19, 2015 6:18 pm

Re: CARES Act Above the Line Charitable Deduction: $300 or $600 for MFJ?

Post by jjface » Wed Jun 24, 2020 10:46 pm

FiveK wrote:
Wed Jun 24, 2020 10:13 pm
jjface wrote:
Wed Jun 24, 2020 9:29 pm
How authoritative/legal is the guidance? I mean it is pretty clear the text of the CARES Act /Tax Code refers to an "eligible individual" so the guidance put forward of it being limited to the "tax unit" sounds bonkers and just a misrepresentation of the law. Unless I am missing some case law that already defined an eligible individual to be a tax unit which would be odd.
See this post for a link to the document Alan S. referenced.

The authors of the document were probably some of those who wrote the law so, bonkers or not, one would expect the IRS to follow that guidance.
True but It should be defensible if audited though not sure who would fight over a $300 deduction. However there is always someone willing to call them out on the letter of the law. If the powers that be want to redefine it they need to write it into law properly not just make it up as they go along but I guess they have been doing that a lot with the cares act eg ppp.

Post Reply