Direct ransfer from IRA to charity

[ebakhd]

Should Form 1099-R show direct transfer from IRA to charity as taxable distribution?

[rjs · Accepted solution]

Yes, the 1099-R includes a Qualified Charitable Distribution in both box 1, gross distribution, and box 2a, taxable amount. The adjustment to the taxable amount is made on your tax return. There is no indication on the 1099-R that you made a Qualified Charitable Distribution. When you enter the 1099-R in TurboTax, it will ask whether you transferred any of the distribution to charity, and it will make the appropriate adjustment on line 4b of your Form 1040.

[Mike9241]

the 1099-R you received contains no code or other info about the direct transfer to a charity. you need to enter this as you are going through the interview steps for the 1099-R. you must enter the amount for the Qualified Charitable Distribution which can be less than the total amount of the distribution. (transfer to charity? check 1 item) 

[ebakhd]

Thank you. And so far, so good. Hope it all works, but not finished yet. But, since RMDs were waived for 2020, why does TurboTax even ask questions about RMDs? And 1099-R seems to be poorly designed. Transfers to charity should not even be shown as taxable income. (I know that is not a TurboTax issue, but probably an IRS issue.)

[rjs]

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@ebakhd wrote:

since RMDs were waived for 2020, why does TurboTax even ask questions about RMDs?

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That's a good question. Maybe they didn't want to do a wholesale makeover of the program, knowing that for 2021 it would have to go back to the way it was. When it asks, just say that none of your distribution was an RMD, and that you were not required to take an RMD for 2020.

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@ebakhd wrote:

And 1099-R seems to be poorly designed. Transfers to charity should not even be shown as taxable income.

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The IRA custodian doesn't have all the information needed to determine whether a distribution that was sent to a charity is a valid QCD. That's what the "Taxable amount not determined" checkbox is for. It's probably checked on your 1099-R. That essentially says "we don't know if the taxable amount in box 2a is correct."

[SweetieJean]

Most RMD's were waived for 2020, but not all (such as for defined benefit plans).

[ebakhd]

Why would a defined benefit pension have a Required Minimum Distribution?

[rjs]

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@ebakhd wrote:

Why would a defined benefit pension have a Required Minimum Distribution?

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@ebakhd The regular monthly payments that you get from a defined benefit pension plan are technically considered an RMD. There is no requirement for you to take any money out of the plan other than the regular monthly payments. Pension payments were not waived for 2020. You continued to get your regular payments.

[ebakhd]

How can regular monthly payments from a defined benefit pension plan be technically considered an RMD, when there is no requirement involved?  Is this stupid IRS nonsense?  Or is this a stupid TurboTax idea to ask unnecessary and irrelevant RMD questions about payments from a defined benefit plan?

[macuser_22]

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@ebakhd wrote:

How can regular monthly payments from a defined benefit pension plan be technically considered an RMD, when there is no requirement involved?  Is this stupid IRS nonsense?  Or is this a stupid TurboTax idea to ask unnecessary and irrelevant RMD questions about payments from a defined benefit plan?

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It is what the tax law says.

The rules that the plan administrator must use to calculate the RMD for a defined benefit plan as required by §401(a)(9) are defined in § 1.401(a)(9)-6) of the Internal Revenue Code (IRC).

The answer to the question does not go on your tax return, it is simply to make sure you do not owe any penalty for not taking the RMD or use it for an ineligible rollover.

[Bob1552]

I am trying to confirm that the transfer from my IRA was in fact deducted from taxable income, even though it is not shown as a charitable deduction.

I am reasonably certain that I did that, and that it was entered properly, but cannot locate it to reconfirm.  How can I be sure that it is entered and properly accounted for?

[macuser_22]

If a QCD then look on the 1040 line 4a for the gross distribution with "QCD" next to it and line 4b would be the taxable amount that should not include the QCD amount.