- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Retirement tax questions
Unless all of your traditional IRA contribution for 2021 is made nondeductible, you have a complicated situation that TurboTax does not handle automatically. Any portion of your traditional IRA contribution that is deducted on Schedule 1 reduces the amount of your contributions to charity from your traditional IRAs that can be claimed as QCDs. If you make all of your traditional IRA contributions nondeductible, there is no reduction in the amount that you can claim as QCD as long and the amount contributed to charity is no more than the amount that would have been taxable had you distributed all of your traditional IRA funds in 2021. QCDs can only be made from otherwise taxable funds. The QCD total your the year cannot exceed $100,000, but be aware that even though this limitation applies across all of your traditional IRAs, TurboTax only enforces this limitation on a per-form basis. You'll have to limit it yourself if you made contributions to charity from multiple traditional IRAs.
TurboTax does not track the amount of deductible traditional IRA contributions made in or after the year you reached age 70½ that reduce QCDs. You'll have to track those yourself, a bit like Roth IRA contributions are tracked. The contributions to charity come first from the deducted traditional IRA contributions made in or after the year you reached age 70½ and only amounts beyond that contributed to charity can be claimed as QCDs.
If all of the contributions to charity were paid from the same traditional IRA, you will have received one 2021 Form 1099-R with code 7 in box 7 and the IRA/SEP/SIMPLE box marked. When entering this Form 1099-R into TurboTax you'll indicate that some or all was paid from the IRA directly to the charities (by marking a checkbox in the online version or answering the specific question posed by the CD/download version) and then indicate the amount that qualifies as a QCD. TurboTax will exclude the QCD amount from the amount on Form 1040 line 4b and will include the "QCD" notation next to the line. The fact that your QCDs exceed your MRD is irrelevant.