Can someone explain why I am being asked to explain a withdrawal of an excess traditional IRA contribution from 2021 or a previous year? I don't understand this at all.

[caf0707]

We haven't made contributions to IRA's in years.  I just don't know where to look on previous tax returns to figure this out.

[Anonymous_]

I am going to page @dmertz. Check back later.

[DaveF1006]

It depends. When is the last time you made a IRA contribution?

@caf0707

[dmertz · Accepted solution]

This prompt results from entering a code 1, 2 or 7 Form 1099-R for a distribution from an IRA and you mistakenly entered a zero in box 2a of TurboTax's 1099-R form.  The IRS requires that a Form 1099-R with code 1, 2 or 7 in box 7 and the IRA/SEP/SIMPLE box marked always have the same amount in box 2a as is in box 1.

A rollover or Roth conversion is to be indicated in the questions that follow entering the form details exactly as they are shown in on the form provided by the payer.

[Tom513]

Entering 0 in box 2a is not a mistake if you directed the IRA withdrawal to go 100% to charity.

This is an error in TurboTax. It can deal correctly if you donate an IRA withdrawal only partially to charity, but if it all went to charity, the the taxable income is 0.

See IRS instructions on how to report IRA withdrawals directly to a charity.

[dmertz]

@Tom513 , that's incorrect.  Read the TIP on page 1 of the Instructions for Form 1099-R which says the exactly the opposite.

Entering a zero in box 2a of a Form 1099-R reporting a QCD from a traditional IRA is not how you indicate that the distribution is not includible in income.  Indicating that the distribution was transferred to charity is indicated by explicitly telling TurboTax that some or all of the distribution was transferred to charity.

A zero entered in box 2a of TurboTax's 1099-R form when box 7 has code 7 and the IRA/SEP/SIMPLE box is marked has only one special meaning in TurboTax.  Doing so is how you indicate to TurboTax that the distribution is a nontaxable distribution of an excess contribution when the distribution is made after the due date of the tax return (including extensions) and causes TurboTax to prompt the use to enter the required explanation of this distribution..

[LindaS5247]

Your Form 1099-R should always be entered as it is shown, unless there is an error and in that case a corrected Form 1099-R should be issued. 

To report 100% of your excess IRA contributions going to charity, TurboTax will take your age into account and determine if you qualify to make a QCD.  

After you enter the information from your Form 1099-R, which reports the distribution there will be some follow-up questions.  

One of those questions will be if the distribution was transferred to a qualified charitable organization.  

You can choose either all, part, or none of the distribution was transferred.  This will take care of reporting the distribution correctly on your return.

Then, on your actual Form 1040, line 4a will include the amount of your distribution and line 4b will show any taxable amount ($0 if the entire distribution was transferred to the charitable organization) and the designation QCD will be shown on that line as well.

To go directly to the section of your return to enter your Form 1099-R, use these steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “1099-r” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to 1099-r”
• Click on the blue “Jump to 1099-r” link and enter your information

Taxpayers must also file Form 8606 if the QCD came from:

• a traditional IRA and they received a distribution from the IRA during the same year, other than the QCD; or
• a Roth IRA.

Click here for more information on QCD's.