Can my 72-year-old wife insert her QCD donation into TurboTax Deluxe even though she has $0 RMD?

[proschke]

Her IRA is traditional and we're planning for our 2025 taxes using 2025 software. When we enter $0 for her RMD it automatically rejects any QCD amount greater than zero.

[SteamTrain]

@proschke 

Pleas edit your question to indicate exactly what Desktop software version you are using  (Can't be "Online" since that software isn't available yet).

1)  Check the birthyear you put in for her.  It has to be 1953 if she turned 72 anytime in 2025.

2)  Make sure you didn't add the 1099-R form as belonging to yourself if you are 73 or older during 2025.

3)  If 1) and 2) are OK, then the software shouldn't be asking anything about an RMD at all....then perhaps the 2025 software isn't ready for entering that data yet.  There should only be a final question, with three options, about having all or part of the distribution transferred to a charity.

4)   Don't put a zero in box 2a of the 1099-R form.  It's either blank  (box checked for taxable amount undetermined), or contains the same $$ amount as in box 1 (if her total IRA contributions contained NO non-deductible contributions...i.e. all will be considered taxable income until the QCD is selected later).

5)  make sure a 7 is selected for the box 7 code, and that the IRA/SEP/Simple box is checked.  Perhaps the software might have the "Y" code in a later update, but your actual IRA 1099-R form that you get early next year could still be a 7 even if the Y code is available....should work OK either way.

6)  Make sure you've entered all your other expected income first.  There are AGI limits to the QCD amount, so the software will need to know all you other income first before it can allow any QCD amounts.

7) IF testing for your 2025 situation, you don't need to enter that QCD 1099-R anyhow, as it won't really affect your AGI for 2025 as long as it doesn't go over whatever QCD limits are in effect for 2025.  

8  ) If you have the 2024 desktop software, that might be more accurate using the "What If" worksheet with last year's data transferred to a 2025 column...then changing the various amounts on that worksheet to reflect what you expect for 2025 taxes.

Or...perhaps the 2025 software just isn't really ready for the QCD stuff yet.   There are tons of updates yet to be made to the software.  Most of us simply do not trust the early version TTX sends out at this time of year to be anywhere close to what is usable...I won't until next January-late.    

[VolvoGirl]

How are you entering the QCD without the 1099R yet?   You need to enter it as a 1099R.  There is a new code for QCD in box 7.  Type a Y in box 7 for QCD.   I think you have to enter 2 codes in box 7,  a 7 and a Y.   Also the 2025 will need several updates so the 1099R section might need a lot of updates.  You can try filling out a 1099R in Forms mode.   Did she make any QCD for 2024 or 2023?  I'm also 72 and started making QCD when I Turned 70 1/2.   

Oh, if it's asking about a RMD amount then go  back and check her date of birth under Personal.   And make sure the 1099R is under her name, not yours.  How old are you?  Are you taking RMD?  It should not be asking what her RMD is.   What is her birthdate?  

[dmertz]

Since the 1099-R  section of 2025 TurboTax is not yet available, entering a QCD must be done in step-by-step mode.  Entered properly on TurboTax's 1099-R form, TurboTax will allow a QCD entry.

2025 TurboTax imposes no requirement that a QCD be an RMD.  If your wife's birthdate entered into TurboTax is a date before July 1955, TurboTax's 1099-R form is marked as a regular From 1099-R, is marked as belonging to your wife (when filing jointly), the code in box 7 is either 4, 7 or Y (and no other codes), the IRA SEP/SIMPLE box is marked and boxes 1 and 2a have the same value that is more than or equal to the QCD amount, TurboTax will treat the distribution as a QCD.  Box 2b Taxable amount not determined should also be marked, but TurboTax does not require that for treatment as a QCD.  If you enter a QCD amount more than the $108,000 limit for 2025, TurboTax will flag the entry as an error but will still treat the entire amount as a QCD when determining the amount that appears on Form 1040 line 4b.

TurboTax does not yet support code Y, so just enter the code 4 (distribution from an inherited IRA) or code 7  (distribution from an owned IRA) as appropriate.  For 2025, the IRS does not require financial institutions to use code Y to report QCDs, instead making the use of code Y optional.

(Note that although it might be possible to do a QCD from a Roth IRA distribution reported with code T, the circumstances that would allow any of this distribution to be a QCD are so rare that TurboTax does not support reporting a QCD from a Roth IRA.)

[NCperson]

@proschke why does it even matter at this point of the tax cycle? 

Since the RMD is zero, the QCD has no impact on your tax return.  

Eventually, the 1099-R has to be entered exactly as it displays on the form.  But for now, does it even matter? 

[dmertz]

The original question was whether TurboTax can handle the entry of a permissible QCD.  The answer is Yes, if entered properly.