Tax reporting of QCD made in excess of MRD

[Chuck822]

In 2021 I made 3 QCDs after withdrawing my full MRD for 2021.  The QCD does not appear on my 1099-R as the QCDs were made by check drawn on my IRA.  Also, part of my IRA contributions was not deductible.  How does this factor into reporting?

[dmertz]

Unless all of your traditional IRA contribution for 2021 is made nondeductible, you have a complicated situation that TurboTax does not handle automatically.  Any portion of your traditional IRA contribution that is deducted on Schedule 1 reduces the amount of your contributions to charity from your traditional IRAs that can be claimed as QCDs.  If you make all of your traditional IRA contributions nondeductible, there is no reduction in the amount that you can claim as QCD as long and the amount contributed to charity is no more than the amount that would have been taxable had you distributed all of your traditional IRA funds in 2021.  QCDs can only be made from otherwise taxable funds.  The QCD total your the year cannot exceed $100,000, but be aware that even though this limitation applies across all of your traditional IRAs, TurboTax only enforces this limitation on a per-form basis.  You'll have to limit it yourself if you made contributions to charity from multiple traditional IRAs.

TurboTax does not track the amount of deductible traditional IRA contributions made in or after the year you reached age 70½ that reduce QCDs.  You'll have to track those yourself, a bit like Roth IRA contributions are tracked.  The contributions to charity come first from the deducted traditional IRA contributions made in or after the year you reached age 70½ and only amounts beyond that contributed to charity can be claimed as QCDs.

If all of the contributions to charity were paid from the same traditional IRA, you will have received one 2021 Form 1099-R with code 7 in box 7 and the IRA/SEP/SIMPLE box marked.  When entering this Form 1099-R into TurboTax you'll indicate that some or all was paid from the IRA directly to the charities (by marking a checkbox in the online version or answering the specific question posed by the CD/download version) and then indicate the amount that qualifies as a QCD.  TurboTax will exclude the QCD amount from the amount on Form 1040 line 4b and will include the "QCD" notation next to the line.  The fact that your QCDs exceed your MRD is irrelevant.

[Chuck822]

I am not sure my reply sent in response to your posting is accurate. I will try again.  I have not made any contributions to my IRA in years.  A small portion of the contributions I made years ago are non-deductible.  In 2021, I first took all of my MRDs.  Thereafter, I wrote 3 checks from my IRA to charities that qualify as QCDs.  However, the 1099-R from my custodian does not include the amount of these 3 checks.  I am 83, so I am able to make QCDs.  How do I handle this in Turbo Tax Premier for Mac?  Should I just add the QCD amount to the gross amount reported on my 1099-R and then indicate that portion is QCDs?

[dmertz]

I see.   I misinterpreted your original question as indicating that you made a contribution for 2021.  You can disregard the concerns I mentioned about making deductible contributions in or after the year that you reached age 70½ [I previously said age 72, but I corrected that] unless you make such contributions in the future.

The rest of my original reply applies.  QCDs can only come from the pre-tax portion of your funds in the traditional IRA.  As such the amount that you indicate as QCD is not reported anywhere on Form 8606 and your basis in nondeductible contributions remains in your traditional IRAs.  When you indicate to TurboTax the amount that is QCD, TurboTax will omit the QCD from Form 8606 and will also exclude the QCD amount from the amount on From 1040 line 4b.  If all of your distributions went to QCDs, your year-end balance in your traditional IRAs must be at least as much as your basis in traditional IRAs, otherwise some of your basis will have gone to a charity, will not be a QCD and must appear on Form 8606 to reduce your basis going forward.

However, I'm not sure what you mean by these 3 check not appearing on the Form 1099-R.  Certainly they won't be separately identified on the Form 1099-R as being QCDs, but the total of these checks must be included by the custodian in the amount that appears in box 1 and box 2a if they resulted in distributions from your IRA in 2021.

If these checks did not post to your IRA before the end of 2021, these would not be 2021 distributions.  Presumably they would post to your IRA in 2022 making them 2022 distributions that would appear on your 2022 From 1099-R.  With regard to your 2021 MRD, whatever amount is shown on the Form 1099-R goes toward satisfying your 2021 MRD.  If that wasn't sufficient to satisfy your 2021 MRD, part of the QCD made in 2022 is could be treated as a late-taken 2021 MRD for which you can request a waiver of the 50% excess-accumulation penalty on 2021 Form 5329.  Amounts distributed in 2022 beyond what is applied to the late-taken 2021 MRD would go toward satisfying your 2022 MRD.