I can't add an explanation statement to Turbotax this year for my RMD (QCD)

[knappingsbcglobalnetchrista]

Hi,

I have taken my RMDs as QCDs for the past five years. One year, the IRS "missed" the X next to QCD and sent me a bill with penalties for my whole RMD. I was able to get it straightened out, but it caused me a lot of stress, time, and anxiety. They said they had just "missed" seeing the X and sent me a huge tax bill (for the RMD).

Since that year, I have always clicked on line 4B and the QCD notation, and added an explanation statement such as:

The gross amount of the distribution, $xxxx, is included on line 4a. The QCD notation

is included next to line 4b to indicate why the taxable amount, $0, is less than the

gross amount.

I am working on my taxes now and do not see any way to add the Explanation Statement! I am using the Desktop Premier version of Turbotax. Is there any way to add an explanation statement? I do not want to have to deal with the IRS again about this. Thank you!

[MaryK4]

No, there is no way to add an explanation statement in TurboTax.  If you report the Qualified Charitable Deduction, you do not need a statement.  See What is a Qualified Charitable Distribution? - TurboTax Support.

[VolvoGirl]

After you enter form 1099-R keep going.   If you have entered a birth date which makes you older than 70 1/2  there will be a page that asks Do any of these situations apply? Midway down is Were any of these funds sent directly to a charity?   Then it will ask for the amount.

The code in box 7 of form 1099-R must be 7 and the little IRA/SEP/SIMPLE box must be checked.  A IRA QCD should be 0 taxable on 1040 line 4b and the QCD box checked.  Unless you have other 1099R taxable amounts on 4b.  You can’t do a QCD from a 401K.

For QCD there is a new checkbox on the 1040 line 4.   

4a is the amount of the IRA distribution.   

4b is the taxable amount.   

4c has 3 checkboxes.  Checkbox 2 is for QCD.   

[knappingsbcglobalnetchrista]

@MaryK4 thank you but I have been able to add an explanation in previous years, including last year, so that the IRS would not "miss" the QCD notification (X) and send me a bill for my entire RMD as they did one year in the past.

Why has Turbotax taken away the option to add an explanation statement this year? Is there any way for me to add an explanation statement in Turbotax this year?

[knappingsbcglobalnetchrista]

@VolvoGirl Thank you, I have entered it all correctly and 4B is zero and the QCD box is checked. In previous years I have added an explanation statement in addition, because the IRS one year missed my correctly entered QCD one year. But I see no way to add an explanation statement this year.

[VolvoGirl]

Did you happen to mail in your return the year they missed it?   If you efile their computer should not miss it.  I’ve been doing QCD for several years with no problem.   

[knappingsbcglobalnetchrista]

@VolvoGirl No, I had efiled! Which made it even more frustrating that it had been missed. When I spoke to the IRS, they said they missed it completely and it was an error.

[VolvoGirl]

Did your return say QCD by line 4b?   I wouldn’t worry about it anymore.   If you want to add a statement you would have to mail your return.   

[knappingsbcglobalnetchrista]

Dear @VolvoGirl ,

Yes, in my efiled 2022 taxes, when the IRS missed my that my RMD was a QCD, line 4B said QCD.

My form for 2025 also says QCD for line 4B.

I'll try not to worry about it, since I prefer efiling. I just wish I could add the explanation statement, as I have in the past, and efile, as I have in the past (including last year). I wish Turbotax had not taken away that option this year.

[dmertz]

Although the IRS Automated Underreporter System won't flag a QCD as unreported income, if the tax return  still gets selected for examination it's possible for an examiner to miss the QCD notation and believe that income has been underreported.  (Believing that taxable IRA income was underreported when the AUR didn't indicate that to be the case was probably the result of a training deficiency.)

[knappingsbcglobalnetchrista]

@dmertz Thanks! Ever since the issue with the IRS training deficiency, I've added the explanation statement to my taxes to try to prevent the issue from happening again. I will also, of course, keep all of my documents and statements from the charities regarding my QCD. Thanks again.