For 2021, my charitable deductions were much greater than my AGI. I think all I owe to the Feds on Income Tax for 2021 is the 3.8% tax on Investment Income. Correct? Or not?
1 Answer
That is correct, even if you elect to apply charitable contributions deduction to up to 100% of your AGI (something that is allowed in 2021 specifically), the deduction would still be added back into the Modified AGI for the purposes of NIIT (See 26 CFR 1.911-6).
answered Feb 8, 2022 at 22:59
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Where is there a 100% limit for 2021? There was one for 2020, in CARES PubL 116-136 sec 2205, but I've not heard of, or seen on the IRS website, any for 2021. There is a nonitemized charitable deduction for cash up to $300/$600 for 2021 in TCDTRA PubL 116-260 div EE sec 212. Also 1.911 is about the Foreign Earned Income Exclusion and irrelevant here; more to the point AGI, and thus MAGI for NIIT, is computed before any itemized deductions are taken. Commented Feb 9, 2022 at 6:34
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@dave_thompson_085 as to MAGI, then 26 USC 1411(d)(2) refers to Sec. 911(d)(6) with regards to MAGI calculation for NIIT: law.cornell.edu/uscode/text/26/1411 Commented Feb 9, 2022 at 7:50
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(1) I see on the other Q you pointed to CAA in 2020 (but div N not div EE) which is further back than I searched, and I wouldn't call that recent in Sept. 2021, but yeah, good enough. (2) 1411(d) refers to both 911(a)(1) and (d)(6). It adds back any income excluded by (a)(1) less any AGI deductions or exclusions disallowed under (d)(6) related to the income in (a)(1). OP has no FEI&HE income in (a)(1), thus there can be no related deductions or exclusions; and if there were, the charitable deduction is not 'taken into account in computing adjusted gross income' so ... Commented Feb 11, 2022 at 7:51
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... it still wouldn't be included in the amount in para (2), and if it were unitemized and thus included in para (2) it would not be added back but rather subtracted from the add-back done in para (1) (i.e. it would be re-allowed). Commented Feb 11, 2022 at 7:52