Are church offerings made directly from an IRA considered a charitable event?

[MichaelDC · Accepted solution]

It is a charitable contribution, however you cannot include it and otherwise deduct it along with other charitable donations.

A Qualified Charitable Distributions (QCDs) is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your minimum required distributions (MRDs) for the year, as long as certain rules are met.

In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.

Since it is already excluded from your taxable income, you can't take the itemized deduction (charitable donation) again. That would be double-dipping.

While many IRAs are eligible for QCDs—Traditional, Rollover, Inherited, SEP (inactive plans only), and SIMPLE (inactive plans only)* —there are requirements:

• You must be 70½ or older to be eligible to make a QCD.
• QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
• The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.)
• For a QCD to count towards your current year’s MRD, the funds must come out of your IRA by your MRD deadline, generally December 31.

[santa608]

Where do you deduct your qualified charitable contribution from your IRA?

[DianeC958]

If you are having the money from your IRA going directly to the Charity you do not deduct that amount on your tax return.  Since the amount is going directly to the Charity that amount you withdrew from the IRA is not taxable to you.  Because it is not taxable to you, you have not paid Federal tax on that amount so you have already received the tax benefit.

@santa608

[Hurricanes85]

So then we do not report that income from our 1099 which our IRA sent us which we gave directly to charity as income ? Directly from the IRA . It never was handled by us.

[Irene2805]

You do report the 1099-R for your Qualified Charitable Distribution (QCD), but then you indicate that it was used for a QCD.

To do this in TurboTax, please follow these steps:

TurboTax CD/Download

1. Enter the information from your 1099-R and click Continue.
2. After a few screens, you will see a screen, Transfer to Charity?  
3. Mark the radio button I had all of this distribution transferred to charity and click Continue.

TurboTax Online

1. Enter the information from your 1099-R and click Continue.
2. After a few screens, you will see a screen, Tell us if any of these uncommon situations apply.
3. Mark the box I transferred all or part of this money directly to charity and click Continue.

The income from the 1099-R will not be added to your taxable income.  Keep in mind that you cannot also take a charitable deduction for this same contribution since the distribution was tax free.

[Hurricanes85]

thankyou! 

Now for another question in the same sphere. If I made a mistake on my 2019 taxes and reported the QCD but did not remove it from being taxable can I refile some way to get that corrected?  Thanks 

[DawnC]

Yes, you can file a 2019 amended tax return to correct your 2019 federal tax liability.    You can amend e-filed returns if they've been accepted; paper-filed returns may be amended once they've been mailed.

If your e-file is still pending, you won't be able to make changes until the IRS either accepts or rejects it. Don't know your e-file status? Here's how to look it up.  Select your tax year for amending instructions:

• 2020
• 2019
• 2018
• 2017

Keep in mind: You have 3 years from the date you filed your return or 2 years after you paid the tax due (whichever is later) to file an amendment.

Related Information:

• What does it mean to "amend" a return?
• Do I need to amend?
• Will amending delay my original tax refund?
• What is the deadline for filing an amended return?
• Can I e-file my 1040X to amend my return?     @Hurricanes85

[Nirudo]

In 2020, I withdrew  $ in excess of the RMD, and directly have some of it transferred to a qualified charity and converted remaining to ROTH IRA.  I realize that the converted amount to ROTH IRA is taxable as ordinary income.  Where in TurboTAX  I enter this conversion?  I am obviously making a mistake, since in final check TurboTAX flags an error, and I cannot seem to correct it.  Thanks. 

[Irene2805]

To indicate that you made a qualified charitable donation AND converted part to a Roth IRA, please follow these steps:

STEP 1.  To get a fresh start, delete the 199-R you've previously entered.

1. Click on Federal > Wages & Income.
2. Scroll down to the Retirement Plans and Social Security section and click on the Start/Revisit box next to IRA, 4701(k), Pension Plan Withdrawals (1099-R). 
3. You will see a screen Your 1099-R Entries.  Click the Delete box next to the 1099-R you entered.

STEP 2.  Enter the 1099-R

1. On the Your 1099-R Entries screen click the box Add a 1099-R.
2. Enter the information from the1099-R in the return.  Make sure the IRA/SEP/SIMPLE box below box 7 is marked.
3. On the screen, About this Retirement Account, mark the radio button, Yes some or all of this was an RMD.
4. Below the grey line, mark the radio button that part of the distribution was an RMD and enter the amount of your RMD.  [See Screenshot #1 below.]
5. On the Transfer to Charity? screen, mark the radio button that part of the distribution was transferred to charity.  [Screenshot #2]
6. On the next screen, How much was sent to charity, enter the amount of the charitable contribution.
7. On the screen, What Did You Do with the Money from this Payer?  mark the radio button I moved the money to another retirement account  [Screenshot #3]
8. In the next section select I did a combination of rolling over, converting, etc.
9. In the bottom section, enter the Amount converted to a Roth IRA account.

Screenshot #1

Screenshot #2

Screenshot #3

[Nirudo]

Thank you so much for expert and detail information. You are the best and kudos to you. Stay safe.

Sincerely,

Nirudo

[mountainlover1]

I have this same issue for my 2021 taxes (taking a distribution from a regular IRA and doing the following: (1) converting almost half to a Roth IRA, (2) using the remaining amount to take the 2021 RMD and using a portion for QCD).

The most recent version of Turbo Tax premier will not allow me to enter these different activities. The program allows me to enter how much of the distribution was an RMD, and I can indicate that some or all was converted to a Roth IRA.

The problem comes with the question "Did you convert the gross amount (Box 1) to a Roth IRA? The choices are "Yes, all of this money was converted to a Roth IRA?" or "No, I converted less than the total" I select the second option and enter the actual amount converted to the Roth. When I try to continue to the next screen, the "Yes, all of this money was converted..." option is highlighted in red and a message saying "this info is required" shows up. I cannot move forward from this point.

[DaveF1006]

To clarify, are you using the online version or the software?

@mountainlover1 

[mountainlover1]

I'm using the online version.

[GeorgeM777]

The reason you may not be seeing the charitable option, and to follow-up on the comments from @DaveF1006, is perhaps because of the Distribution Code in Box 7 on the 1099-R.  For example, a Distribution Code of 7, a normal distribution, will generate a page where you can select the charitable option and enter an amount of such donation.  What Distribution Code do you have in Box 7?

@mountainlover1