FreeTaxUSA Error with Charitable Deduction Limits (Capital Gain Property 30% Limit)

Franklin7777
Franklin7777 Member Posts: 3 Newcomer
in Credits/Deductions

Hello - I believe I have found a possible issue/error with FreeTaxUSA 2024. I made a large amount of charitable contributions in 2024 in the form of donated stock - or Capital Gain property. According to the IRS, deductions for Capital Gain property are supposed to be limited to 30% of my AGI, with the rest carried over to following years. Right now as I enter my tax information, my donated stock exceeds 30% of my AGI but FreeTaxUSA is showing a deduction for the full amount. I believe this is wrong, unless it somehow gets fixed up later in the process. Anyone have any insight here?

Comments

  • ChipGirl
    ChipGirl Member Posts: 9 Level 3

    The software should properly limit the donation of your capital gain property to 30% of your AGI. I just tested it in an account and my test amount was limited. However, depending on the information entered in your account, you may be seeing something different. It would probably be most helpful to contact customer support from within your account so they can view the specifics of your account and help identify what is occurring with your charitable stock contributions.

  • Franklin7777
    Franklin7777 Member Posts: 3 Newcomer

    I just tried again and it's still doing it. I was already comparing this process to TurboTax this year, and (gasp) TurboTax actually does this right. Very disappointed in FreeTaxUSA here.

  • WrenD
    WrenD FreeTaxUSA Admin Posts: 41 image

    Hello Franklin 7777,

    Thank you for reaching out and sharing your experience. We appreciate your comments.

    Currently, FreeTaxUSA does not support the 30% AGI limit for capital gain property at this time.

    Your feedback is valuable to us as we continually seek to enhance our services. If you have any further questions or need assistance, please feel free to contact our support team. They are there to help with any complexities you may encounter.

  • Franklin7777
    Franklin7777 Member Posts: 3 Newcomer
    edited January 2025
    https://community.freetaxusa.com/discussion/comment/4021#Comment_4021

    Wow, that's legitimately surprising - and blatantly incorrect. If I filed today, it would be flat-out wrong. Glad I'm using this as a comparison to other programs that do it right. Really disappointing.

  • Danfu
    Danfu Member Posts: 1 Newcomer

    This limitation still exists for tax year 2025, I confirmed with support today

  • silver_cattle
    silver_cattle Member Posts: 1 Newcomer

    Just ran into this too! Is there a way to force freetaxusa to use the right number, or do I need to switch products?

  • JanaA
    JanaA FreeTaxUSA Agent Posts: 175 image
    Hello silver_cattle and Danfu! Unfortunately, FreeTaxUSA does not currently support the automatic 30% AGI limit calculation for capital gain property donations. This is a known limitation of the software, and I'm sorry for the frustration this causes.

    If the 30% limit with full fair market value is the correct and more beneficial treatment for your situation, then unfortunately you would need to prepare your return using a different tax software that supports that calculation.
  • JoeWras
    JoeWras Member Posts: 1 Newcomer

    Here we are on March 29, 2026. This stock (property) donation 30% AGI limit non-calculation mistake is still there. Wow! What a disappointment.

    I was pretty excited to read all the buzz about FreeTaxUSA and decided to give it a good side by side comparison with TurboTax. I really, really like the FTUSA interface over TurboTax. But a problem like this is a non-starter. The two software programs are in lock step until it hits this problem. It is the only difference. I rarely do a large donation like this, and I feel lucky I tried something like this on this tax year to give me a feel for the confidence factor of FTUSA. My confidence is officially LOW.

    There's no excuse for this. It should at least throw a warning screen or something. This is a simple calculation that the IRS will easily flag and send a bill. I can't believe it.

    I'm going to stick with TurboTax for now. It does it right and will handle the carry over next year. Maybe I'll try again in a few years to see if FTUSA gets their act together.

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 963 image
    Hi JoeWras,

    We have requested that the limit be added to our software. As of this date, we do not currently support the 30% AGI limit for certain non-cash donations or donations to certain organizations subject to the 30% rule. We are sorry for the limitation in our software.
  • balthazaroc
    balthazaroc Member Posts: 2 Newcomer

    Hi MatthewD, I filed with FreeTaxUSA and just noticed it filed incorrectly because it did not cap at 30% rule. Now I need to file an amended tax return, but since FreeTaxUSA still isn't able to cap the 30%, I cannot amend through FreeTaxUSA (while keeping the excess contribution for carryover next year). Any chance this cap would get implemented before the April 15 deadline?? Otherwise there is no way to amend!

  • WrenD
    WrenD FreeTaxUSA Admin Posts: 41 image
    edited April 17

    Hi balthazaroc,

    I’m really sorry this wasn’t caught before your return was filed. I can understand how frustrating this must be, especially when it involves taxes.

    Unfortunately, the 30% AGI cap for capital gain property donations won’t be available in our software before the April 15 deadline. I know that’s not the answer you were hoping for, and I’m sorry we can’t offer a better timeline here.

    For your amended return, the best next step would be to use another tax software that supports this calculation. You would need to recreate your original return exactly as it was filed, and then prepare the amendment from there. That should allow the other software to apply the 30% limit correctly. If it helps for how the overall process works, this is how someone files an amendment in our software if they didn't originally file with us:

    https://community.freetaxusa.com/kb/articles/289-how-do-i-amend-a-tax-return-if-i-m-new-to-freetaxusa?utm_source=community-search&utm_medium=organic-search&utm_term=amend

    Again, I’m sorry for the trouble this has caused. We really do appreciate you bringing it to our attention, and we’re taking the feedback seriously as we work to improve the software.

  • balthazaroc
    balthazaroc Member Posts: 2 Newcomer

    Ok, thanks Wren. Is the team able to add the 30% cap soon, so that I could still e-file the amended return, even if after the April 15th deadline?

    Given FreeTaxUSA's 100% accuracy guarantee, I assume any penalties incurred due to this software error will be reimbursed by FreeTaxUSA.

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