How to report complicated QCD?

[harlen29fax]

How can I recover the nondeductable cost basis of my IRA if I donated to a charity using QCD from my IRA acc't? My IRA is an aggregate of pretax and post tax dollars. The tax treatment of QCD uses pretax dollars.  In the past I use form 8606 to calculate the tax credit for the post tax dollars. 

[macuser_22 · Accepted solution]

A QCD is not taxable at all and does not touch the basis in the IRA if the entire distribution was a QCD.  If only part of the distribution was a QCD and part was taken in cash then the basis will be pro-rated between the part taken in cash and the entire years end IRA value just as if only the cash part was distributed and that will be calculated on a new 8606. 

If the entire distribution was a QCD then no new 8606 will be generated since the basis does not change.

[dmertz]

Also note that the amount of a QCD cannot exceed the amount of your IRA that would be taxable if your entire balance in traditional IRAs was distributed by year end.  Any more than that transferred to charity must be reported as a Schedule A deduction.

For example, if you have a traditional IRA balance of $30,000 and $20,000 of that is basis, transferring $25,000 to charity will result in a $10,000 QCD and a $15,000 Schedule A charitable deduction (assuming no investment gains or losses by year end on the $5,000 remaining in the IRA).  None of the distribution will be taxable.  In this situation you would have to calculate the QCD amount and Schedule A deduction amount yourself; TurboTax does not do this calculation for you.

[macuser_22]

You beat me, I was adding a note saying the same thing when I saw your comment.

[macuser_22]

BTW:  The question asked how to report the QCD -  so to be a complete answer - enter the 1099-R for the distribution as below.  If your age is over 70 1/2 then the interview will ask if this was a RMD and then it will ask if any or all of it was a QCD.  Answer yes and enter the amount.  That will put the part (or all) of the distribution that was a QCD on line 15a on the 1040 form with "QCD" next to it (line 11a on 1040A) - any taxable portion in excess of the QCD would be on line 15b or 11b.

Enter a 1099-R  here:


Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type:  Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE:  When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases.  You can always return as shown above.]