turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Ignite7
New Member

If I directly submit my IRA RMD to a charitable annuity, how will that dollar amount be reported and what impact on taxes?

 
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

4 Replies

If I directly submit my IRA RMD to a charitable annuity, how will that dollar amount be reported and what impact on taxes?

The interview process will ask you the question. After you enter the 1099-R for your IRA distribution, as you continue through the interview questions it will ask you if you gave any of the distribution to charity. That's where you will be able to show that it was a Qualified Charitable Distribution.

 

If the distribution is appearing on line 4 it's because you did not check the IRA/SEP/SIMPLE box when you entered the 1099-R in TurboTax. If the IRA/SEP/SIMPLE box is not checked on the actual 1099-R, then either the 1099-R is not filled out correctly or the account is not a traditional IRA.

 

Requirements For Qualified Charitable Distributions From An IRA

The core requirements for making Qualified Charitable Distributions (QCDs) from an IRA to a charity are contained in IRC Section 408(d)(8) (as created under Section 1201 of the Pension Protection Act of 2006).

Under the QCD rules, the IRA owner must be at least age 70 ½ to do the QCD to the charity (and notably, the IRA owner must actually be age 70 ½ or older on the date of distribution, not merely turning 70 ½ sometime that year). Under IRS Notice 2007-7, Q&A-36, even a beneficiary of an inherited IRA can be eligible for a QCD, as long as the beneficiary themselves is at least age 70 ½ on the date of the distribution.

 

The maximum dollar amount of a QCD for any individual from his/her IRAs is limited to $100,000 per year. For QCDs, this annual limitation is done on a “per-taxpayer” basis (across any/all of the individual’s IRAs, regardless of how many accounts are used to generate the charitable distribution), though as a per-taxpayer limitation a married couple can each do up to $100,000 (as long as each taxpayer’s QCDs come from his/her respective IRA).

 

Only distributions from an individual IRA (including a rollover IRA) are eligible, and not from a SEP or SIMPLE IRA (if they are still “active” and receiving ongoing employer contribution..., nor from any type of employer retirement plan. Notably, a QCD is permitted from a Roth IRA as well, though most distributions from a Roth IRA are already tax-free and therefore QCD rules wouldn’t be relevant anyway (as described further below).

To qualify for QCD treatment, the rules also stipulate that the distribution must go to a public charity (as described in IRC Section 170(b)(1)(A)), and thus cannot go to a private foundation, nor (as specified in the tax code) may a QCD go to a charitable supporting organization or a donor-advised fund, either.

 

In addition, the charitable distribution from the IRA must be one that otherwise would have been eligible for a full charitable deduction under IRC Section 170 (even though QCDs are not eligible for a deduction, as discussed below). This “must have been eligible for a full deduction” rule ensures that the IRA donor does not receive any kickbacks or other “quid pro quo” benefits for the donation (which would limit the donor’s deduction to only the net amount contributed and fail the “full deduction” QCD requirement). This requirement also prevents any “split-interest charitable trust” (e.g., a charitable remainder trust or a charitable lead trust) from being an eligible QCD beneficiary.

 

 

If I directly submit my IRA RMD to a charitable annuity, how will that dollar amount be reported and what impact on taxes?

The on-line app I am having to use does not ask if any portion of my RMD was a QCD?  It does ask if I received disaster relief.  

DavidD66
Employee Tax Expert

If I directly submit my IRA RMD to a charitable annuity, how will that dollar amount be reported and what impact on taxes?

Your Form  1099-R must have code 7, and the IRA/Simple box must be checked.  In addition, you must be at least age 70 1/2 (according to the date of birth in TurboTax) at the end of the tax year.  As you enter your 1099-R, you will be asked any of your distribution was transferred to charity.  If you answer yes, the next screen will ask how much you transferred to charity. The next screen will let you know that the amount you transferred to charity is designated as a QCD (if you qualify for a QCD). This is the only place that you will actually see QCD mentioned.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
dmertz
Level 15

If I directly submit my IRA RMD to a charitable annuity, how will that dollar amount be reported and what impact on taxes?

Contributions to a charitable annuity are not eligible to be treated as a Qualified Charitable Distribution.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies