Getting RMD penalty when using a QCD to fulfill the RMD required distribution. I believe Turbotax is incorrect. Anyone else had this issue?

[17724135365]

Calculation seems to be ignoring the QCD distribution.

[DaveF1006]

Yes, if this was a QCD from an IRA 1099R, this is how to verify this is reported correctly.

Re-visit your 1099-R entry and ensure you follow these specific prompts:

1. "Did you transfer this to a charity?": On the subsequent "Do Any of These Situations Apply to You" screen, check the box for "I transferred all or part of this money directly to a charity."
2. Then your required Distribution Screen will appear. Here you indicate what your Required Minimum Distribution is.
3. in the next screen asking  How much of this was an RMD?": Even if the entire amount was a QCD, you must select "The entire distribution was an RMD" If the 1099R distribution was more than the RMD,  you will indicate some of the distribution was applied to the December 31, 2025 RMD. Then a popup will appear and you will enter the amount applicable to December 21, 2025 RMD.
4. After entering this, a screen should now appear labeled, Part or All your distribution is now tax free.
5. In your 1099R entry, make sure to mark the small checkbox labeled "IRA/SEP/SIMPLE. This is directly below Box 7

Now look at your 1040 in Boxes 4a and 4b. There should be the full amount of the distribution in 4a. Box 4B will show the taxable amount of the distribution (if any). Beside it should have QCD printed there or it may be marked in a checkbox alongside it. 

TurboTax Online (Web Version)

In the Online version, you can't see the forms while you are entering data, but you can jump into a "Preview" mode at any time.

1. Open your return and click Tax Tools in the left-hand menu. 
2. Select Tools from the dropdown.
3. In the pop-up window, select View Tax Summary.
4. Once the summary screen opens, look at the left-hand menu again (it will have changed). Click Preview my 1040.
5. What to look for: Scroll to Line 4a and 4b.
6. Line 4a should show the total distribution.
7. Line 4b (Taxable Amount) should be $0 (or just the portion that wasn't a QCD). 
8. You should see the letters "QCD" printed next to Line 4b.TurboTax Desktop (CD/Download Version)

The Desktop version is much more flexible because of Forms Mode, which lets you look at the "paper" forms while you work.

1. Look at the top right corner of your screen. 
2. Click the Forms icon  
3. On the left-hand side, you will see a list of every form currently in your return.
4. Click on Form 1040 to open it in the large window

Now look at your 1040 and Lines 4a and 4b to see if everything was entered correctly.

[17724135365]

Thanks for your response.  You must be referring to the online version, because I am using the desktop version, and I don't get exactly the same responses.  I believe that I followed your guidance to the letter, but Turbotax is still telling me I am missing the exact amount of the QCD distribution and that I owe a penalty.  Looking at the 1040 form shows that it is taking the QCD amount into consideration between 4a and 4b.  Am I still missing something in how I have entered my 1099Rs?

[VolvoGirl]

After you entered the 1099R and entered the QCD amount did you keep going and answer the RMD questions?   You need the enter the same amount for the RMD questions.   And if you got more than 1 1099R you need to enter the amount from that box 1 as the RMD for that specific 1099R.  

[17724135365]

Yes, I continued to fill in all questions for all 1099Rs, but cannot resolve the penalty issue...stymied.

[17724135365]

I finally resolved my problem by better understanding what the questions were asking.  It was not obvious how to properly respond to the purpose of the QCD/RMD.   Once I made the correct response (as I finally understood what was being asked) everything was accepted...no penalty!  Unfortunately, it took a lot of investigation (and time) to get to that point.  It could have gone much quicker had I been able to step through the questions with your guidance.  There should be an easy way to do this.

[VolvoGirl]

When it asks how much was RMD that includes the QCD amount.   You enter the whole amount from the 1099R box 1.  And only the amount for that specific 1099R even if it is less or more than your total IRA RMD.