Were you over 70½ years old when you made the QCD last year? The age of the decedent doesn't matter. You have to be over 70½. Did the IRS notice say why they disallowed the QCD?
In TurboTax, after you enter the 1099-R for the distribution from the inherited IRA, continue through the screens. It will ask you a series of questions about the IRA distribution. If the 1099-R has distribution code 7 or 4 in box 7, the IRA/SEP/SIMPLE box is checked on the 1099-R, and you are over 70½ years old, you will come to a screen that says "Transfer to Charity?" On that screen, you can indicate how much of the distribution was sent to a charity. TurboTax will then report it appropriately on your tax return.
Yes I was. They just sent a letter saying they had amended the return and I had an amount due. It was a small QCD and due to circumstances with other things I just decided to not argue about it. I think it’s a reporting issue since it is inherited. There were questions about my mom and had she taken her RMRA. So not sure if I answered wrong or what. I read somewhere an inherited IRA QCD needs to be taken as a death distribution. Just wondered how that is done.
@mikedonna1395 wrote:
I read somewhere an inherited IRA QCD needs to be taken as a death distribution. Just wondered how that is done.
You don't have to do anything to make it a "death distribution." All distributions from an inherited IRA are death distributions. The distribution code in box 7 of the Form 1099-R is 4, which means death. In other words, the distribution was made to the beneficiary after the death of the original owner.
That a QCD can be made from an inherited IRA is not exactly common knowledge. Perhaps the IRS examiner was unaware that a QCD can be made from an inherited IRA and mistakenly treated the code-4 distribution as ineligible to be a QCD. Worldwide professionals Wolters Kluwer whose business it is to provide guidance in tax and accounting apparently had that wrong in their published guidance around 10 years ago despite there being explicit guidance from the IRS in Notice 2007-7 Q&A 37 that QCDs are permitted to be made from an inherited/beneficiary IRA. QCDs first became permissible in 2006, so QCDs have always been permitted to be made from inherited/beneficiary IRAs if the beneficiary is age 70½ or over.
The QCD does need to be reported on your tax return with the "QCD" notation. TurboTax does that for you when entered as rjs described. Nothing on the Form 1099-R indicates that its a QCD.