Video Guide on Entering Qualified Charitable Distributions (QCDs) for the 2025 Tax Year

If you are aged 70 1/2 or older, a Qualified Charitable Distribution (QCD) offers a powerful way to reduce your taxable income while supporting your favorite charities. A QCD is a transfer of funds made directly from your IRA (excluding active SEP or SIMPLE IRAs) by the trustee to a qualified charitable organization.

The greatest benefit of using a QCD is its ability to satisfy your Required Minimum Distribution (RMD) for the year, all while excluding the amount from your gross income. For the 2025 tax year, the maximum annual amount that can qualify for a QCD is $108,000. If you file jointly, your spouse can also utilize this limit from their own IRA, potentially totaling up to $216,000.

To qualify, the transfer must be made directly from the IRA custodian to a qualified 501(c)(3) charity; receiving the funds yourself and then donating them invalidates the QCD. You also do not need to itemize deductions on your return to receive the tax benefit of the exclusion.

How to Report Your 2025 QCD Using TurboTax

Reporting a QCD accurately ensures the funds are properly excluded from your income. Your IRA provider will issue you a Form 1099-R summarizing the distribution.

For the 2025 tax year, IRA providers have the option to use the new distribution code "Y" in Box 7 of Form 1099-R to specifically identify the distribution as a QCD. If Code Y is used, it will be combined with Code 7 (for a normal distribution) or Code 4 (for an inherited IRA). However, since using Code Y is optional, many Form 1099-R documents may still lack any specific indication that the distribution was a QCD.

To report your QCD, first you will input the distribution information exactly as it appears on your Form 1099-R. TurboTax will then guide you with follow-up questions to correctly identify it as a QCD. Watch how TurboTax will guide you through reporting your QCD in our video guide, “How to enter Qualified Charitable Distributions”.