QCD

[rbowler]

If I transfer money directly from Fidelity to my church using their bank account and routing number, will Turbo Tax pick that up and treat it as a QCD (Qualified Charitable Distribution)?  If not what do I need to do to accomplish a QCD?

[DavidD66]

No, TurboTax will not pick up a transfer to your church as a Qualified Charitable Distribution (QCD).  In order to properly report a QCD in TurboTax, you will need to enter your Form 1099-R.  Your Form  1099-R must have code 7, and the IRA/Simple box must be checked.  In addition, you must be at least age 70 1/2 (according to the date of birth in TurboTax) at the end of the tax year.  As you enter your 1099-R, you will be asked any of your distribution was transferred to charity.  If you answer yes,the next screen will ask how much you transferred to charity. The next screen will let you know that the amount you transferred to charity is designated as a QCD (if you qualify for a QCD). This is the only place that you will actually see QCD mentioned.

[jwcjwc]

Unfortunately the above answer is about right and clear as mud. In other words TurboTax Home and Business does a terrible job. It basically makes it hard, hides QCD in a fog, and "help" is nearly useless.

Good luck, the hard work is worth it, but you are pretty much on your own.l

UPDATE: I apologize for my above comments NOT being helpful. Here is more practical information:

"As stated by expert DanaB27, the distribution must be from an IRA, the distribution code on Form 1099-R must be '7', and the IRA/SEP/Simple box must be checked in order for TurboTax to recognize that the distribution may qualify as a QCD. "

The QCD total is the total QCD contributions and only listed here and one time. The next box asks for RMD and as best I can tell is the total RMD amount which does not change and must not be exceeded simply because the allowable QCD can not exceed the total RMD for the year. As long as QCD is less than RMD, then the total amount of QCD is subtracted from income, AGI and all should be well. However, it seems to be hidden by TurboTax, so one way to tell is the amount of estimated taxes to be paid changes significantly. And do NOT list those charitable donations any other place, just keep your receipts. Best wishes!

[jwcjwc]

"As stated by expert DanaB27, the distribution must be from an IRA, the distribution code on Form 1099-R must be '7', and the IRA/SEP/Simple box must be checked in order for TurboTax to recognize that the distribution may qualify as a QCD. "

The QCD total is the total QCD contributions and only listed here and one time. The next box asks for RMD and as best I can tell is the total RMD amount which does not change and must not be exceeded simply because the allowable QCD can not exceed the total RMD for the year. As long as QCD is less than RMD, then the total amount of QCD is subtracted from income, AGI and all should be well. However, it seems to be hidden by TurboTax, so one way to tell is the amount of estimated taxes to be paid changes significantly. And do NOT list those charitable donations any other place, just keep your receipts. Best wishes!

[LrbinMT]

Excellent explanation but for some reason TurboTax is not asking me if this is a QCD. Is TurboTax making the 70.5 age calculation properly?

[macuser_22]

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@LrbinMT wrote:

Excellent explanation but for some reason TurboTax is not asking me if this is a QCD. Is TurboTax making the 70.5 age calculation properly?

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2020 TurboTax presently has a bug the prevents it from asking the necessary question for those with birthdates between July 1, 1949 and June 30, 1950. As a workaround for this, with the CD/download version you can provide the QCD-amount information on the 1099-R in forms mode or in any version of TurboTax you can temporarily change your birthdate in TurboTax to something before July 1, 1949, edit the 1099-R form in TurboTax and answer the question asking how much was transferred to charity, then change your birthdate in TurboTax back to your actual birthdate.

This is due to TurboTax implementing the new IRA RMD age from 70 1/2 to 72, but overlooking that the 70 1/2 age for the QCD did not change. The TurboTax QCD question is tied to the RMD question so if you don't get the RMD question you will not get the QCD question either. This should be fixed in a future update - no telling when, but there is no downside to the workaround as long as the correct DOB is changed back after entering the QCD.

[LrbinMT]

TurboTax is not making the age calculation properly. At the end of 2020 I was 70.9 and it did not ask about RMD or QCD. Changed my age to 1 year earlier and the questions were properly asked. TurboTax needs to fix this BUG

[macuser_22]

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@LrbinMT wrote:

TurboTax is not making the age calculation properly. At the end of 2020 I was 70.9 and it did not ask about RMD or QCD. Changed my age to 1 year earlier and the questions were properly asked. TurboTax needs to fix this BUG

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As my post said, this will be addressed in a future update.  There is no downside to changing the age temporarly.  All it does is get TurboTax to ask the question.

[questioningQCD]

is there any ETA on when the bug will be fixed?   

[MichelleLO]

The current projected date is February 24, 2021. Please see Why am I getting a 10% penalty on my 1099-R when I withdrew fund during Covid? (Form 8915-E) for more information.

@questioningQCD

[dgilles428]

Turbo tax on-line did not ask if any of my 1099-R went to charity, even though my 1099-R had code 7, and the IRA/Simple box  checked.  Do I have to buy a more expensive version of turbotax?

[macuser_22]

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@dgilles428 wrote:

Turbo tax on-line did not ask if any of my 1099-R went to charity, even though my 1099-R had code 7, and the IRA/Simple box  checked.  Do I have to buy a more expensive version of turbotax?

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The workaround for this has been posted in this thread, but I will post it again.

2020 TurboTax presently has a bug the prevents it from asking the necessary question for those with birthdates between July 1, 1949 and June 30, 1950. As a workaround for this, with the CD/download version you can provide the QCD-amount information on the 1099-R in forms mode or in any version of TurboTax you can temporarily change your birthdate in TurboTax to something before July 1, 1949, edit the 1099-R form in TurboTax and answer the question asking how much was transferred to charity, then change your birthdate in TurboTax back to your actual birthdate.

This is due to TurboTax implementing the new IRA RMD age from 70 1/2 to 72, but overlooking that the 70 1/2 age for the QCD did not change. The TurboTax QCD question is tied to the RMD question so if you don't get the RMD question you will not get the QCD question either. This should be fixed in a future update - no telling when, but there is no downside to the workaround as long as the correct DOB is changed back after entering the QCD.

[ronwilensky]

Does Turbotax electronic filing include the explanation statement that lists the one or more QCDs that have been included in the 1099-R?

[macuser_22]

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@ronwilensky wrote:

Does Turbotax electronic filing include the explanation statement that lists the one or more QCDs that have been included in the 1099-R?

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No such statement is required, so no.

Your statement is the word "QCD" next to line 4a on the 1040 form.

[BenDime]

Is the option to specify distributions as QCD available in the online free version of Turbo Tax?

[Cynthiad66]

Yes.  

To report a QCD in TurboTax, enter the Form 1099-R under Wages & Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R).  In the follow-up indicate that some or all of the distribution was transferred to charity.  TurboTax will include the entire amount on Form 1040 line 15a of Form 1040 line 11a but will exclude the QCD amount from the amount on line 15b or 11b.  TurboTax will include the notation "QCD" next to the line.