Your answer is only half right. The problem is that when you do a download of information directly from the institution then Turbo Tax does not ask the question about the charitable donation because the institution is not required to put the code in on the form they send this year nor are they required to confirm that the charity is a 503C which is why they just indicate that it is all normal distribution and taxable when it is not. The program does not ask if part was a direct charitable contribution. The problem is further complicated when doing your state taxes because even if you put the information manually on the federal return and turbo tax asks if part was a QCD and thus do not pay federal tax on the charitable contribution the state return only looks at the form from the IRA administer and misses that a portion was a charitable gift from an IRA that is not taxable. You end up paying tax on the QCD to the state.
