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rhwaldman
Level 1

Taxable IRA withdrawal reduced by both QCD and rollover

My 1099-R taxable income from my traditinal IRA was reported without reduction for my QCD and rollover.  The net effect of these two factors was to reduce the taxable amount to 0, which Turbotax handles nicely in the questions following the entry of the 1099-R.  So far so good.  With no IRA withdrawals as defined by the IRS in the instructions to Form 8606, I should not have to file an 8606 this year, and again, Turbotax properly does not include it in the forms to be filed.  The problem is that if I switch to forms view and open the 8606, my basis in my IRA has been reduced by the exact amount of the QCD.  Will this reduced amount on this unfiled form, but which is stored in Turbotax, actually decrease my basis when I file my 2021 taxes in 2022?  If so, is this a program error or is there something in the tax law that I'm not understanding?

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Accepted Solutions
dmertz
Level 15

Taxable IRA withdrawal reduced by both QCD and rollover

I've revised my previous reply.  My testing appears to indicate that the current release (R16.1) handles the combination of QCD and rollover correctly as long as the year-end balance in traditional IRAs has been entered.

View solution in original post

3 Replies
gloriah5200
Expert Alumni

Taxable IRA withdrawal reduced by both QCD and rollover

If your 1099R was completed incorrectly, then you need to contact the administrator of the account to see if you can get a corrected tax reporting document.

 

Here is the way it should be reported:

 

Here is what you should see reported on the Form 1099R:

  • Charitable distributions are reported on Form 1099-R for the calendar year the distribution is made as distributions.  

How do I report a qualified charitable distribution on my income tax return?

 

To report a qualified charitable distribution on your Form 1040 tax return:

  • you generally report the full amount of the charitable distribution on the line for IRA distributions.
  • On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution.
  • Enter "QCD" next to this line. See the Form 1040 instructions for additional information.

You must also file Form 8606, Nondeductible IRAs, if:

  • you made the qualified charitable distribution from a traditional IRA in which you had basis and received a distribution from the IRA during the same year, other than the qualified charitable distribution; or
  • the qualified charitable distribution was made from a Roth IRA.

Return to IRAs FAQs

 

For additional information refer to:

 

Reporting Qualified Charitable Distributions

dmertz
Level 15

Taxable IRA withdrawal reduced by both QCD and rollover

{Revised]

 

Make sure that you have entered your year-end balance in traditional IRAs.  If your rollover wasn't completed until early 2021, be sure to include this amount as an outstanding rollover.

dmertz
Level 15

Taxable IRA withdrawal reduced by both QCD and rollover

I've revised my previous reply.  My testing appears to indicate that the current release (R16.1) handles the combination of QCD and rollover correctly as long as the year-end balance in traditional IRAs has been entered.

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