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Cash charitable deduction for 2026 and NIIT, net investment income

jsnider47

To make Quicken tax planner give you $2,000 MFJ/ $1,000 Single universal charitable deduction (cash to charity) and calculate NIIT correctly do this: 1) add $2,000 to Adjustments > Other Adjustments field - this gets the income tax correct. 2) add $2,000 to Other Taxes and Credits > NII AGI adjustments (under AMT, this is not AMT but it works) - this gets the NIIT tax correct.

For NIIT you must do this because of how Quicken does its internal MAGI calculation table, you must manually manipulate this field to reduce your NIIT exposure.

Must do both steps to make it work for non-itemizers. If you do itemized deduction and it works for you then disregard this. This deduction starts in tax year 2026 and was made permanent with One Big Beautiful Bill. Note: we put Foreign tax credits in same AMT area, under credits: Other Taxes and Credits > Credits (again not AMT but it works). The Finance Buff published:

2026 2027 Federal Income Tax Calculator for Retirees

and so in checking with Quicken Tax Planner, it was close and noticed the discrepancy in our tax planner - we forgot the NII AGI Adjustment. Now we are same as his (except Quicken does Rental sales - recaptured depreciation better than Harry Sit's, but else it was identical. Quicken's tax planner is still better - way more fields to enter data, plus most of tax informatoin is is already populated in Quicken.

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Comments

Quicken Kristina

Hello @jsnider47,

Thank you for sharing!

Hopefully, this will help others use the Tax Planner!

markus1957

Very helpful, but the calculation should be corrected in the Tax Planner rather than relying on a workaround. Please report the calculation error in the tax planner.

Redacted ~~Adding- I'm rescinding this request until I'm convinced the basis for the claim is validated with documentation.~~

Jim_Harman

Thanks for this workaround, @jsnider47

It is subtle, but in the Other Taxes and Credits section of the Tax Planner, the Alternative Minimum Tax header has a thick line under it, indicating that it only applies to the first column. The items in the second column are not related to the AMT, as you note.

markus1957

Good Catch! I concur that Quicken is not taking an above the line deduction on income for charitable donations up to $2K as it should in order to calculate the NIIT. But I can't make your NII AGI Adjustment work nor can I figure out why it would. You also did not mention how to handle the existing charitable deduction transactions reporting to the tax planner and their contribution to the total deduction being calculated.

Adding- The simplest workaround for now is to enter the projected charitable contributions amount listed in the Deductions section of Tax Planner (up to $1k/$2K) as a negative number in the NII Adjustments box in the Other Taxes, Credits section.

Fixing the calculation is a bit complicated because the register transactions in Quicken are Schedule 1 adjustments up to the limits and then regular itemized deductions after that. The current calculation does incorporate the appropriate limits, but it applies them to the wrong tax schedules.

The fix above is simple and will work for most users but any internal Quicken calculations or phase-out limits associated with AGI may not be calculated correctly. The redacted approach below is more complicated but if you find your tax situation requires an accurate AGI to accommodate a phase-out, it may be appropriate.

REDACTED

~~I'm offering a different approach that I believe more closely matches the actual tax calculation in the forms.~~

In the Deductions section of Tax Planner, note the Charitable Deduction projected amount and if less than $2K for MFJ filers ($1K single), change the selection to a User Entered amount of zero. If greater than $2K (or $1K), input a User entered amount equal to the projected value minus $2K for MFJ ($1K Single filers).
~~Enter the projected Charitable Deduction amount originally noted in Step 1 as an Adjustment, Other Adjustments (as you mentioned). The maximum adjustment is $2K for MFJ or $1K for single filers.~~

This will provide the correct MAGI number for the NIIT calculation and the correct Taxable Income amount to calculate taxes for regular income using the bracket rates and LTCG/QDI using their tax tables. It should also handle amounts greater than $2K if deductions are itemized.

~~Ultimately, Quicken should correct the way it handles the new $1K/$2K above the line charitable deductions.~~

~~Adding- Upon further review, the NII Adjustment only affects the NIIT calculation, not taxable income.~~

So, the simplest workaround for now, assuming you are entering your charitable contributions so they report to tax planner, you can enter a negative number equal to the projected charitable contribution (up to -$2K) into the NII Adjustment box and NIIT will be calculated correctly.

~~The tax planner standard deduction calculation limits the charitable deduction to $2K.~~

Lastly- There is a lot of confusion on what constitutes MAGI after the latest changes so I'd also like to see some definitive documentation on how NIIT is calculated under the new provisions. Probably should have been the first question.

markus1957

After some research and inquiries, the OP's analysis is likely wrong. Throughout the internet, the new deduction is described as above-the-line and that causes confusion. Ultimately, the provision's location in the tax code determines whether or not it impacts AGI.

The new deduction is listed under Section 170 (p) of the tax code so it will be handled with other deductions after the AGI is established. The deduction will not affect AGI.

For a deduction to be classified as an adjustment to income that would reduce AGI, it would have to be listed under Section 62 (a).

We won't actually know until the tax forms are published or specific guidance is issued but the tax code currently indicates it will be a deduction that does not reduce AGI.

The way Quicken currently incorporates the new deduction is likely correct and should not be changed.