QCD from an RMD for 2022

[hanknjoyce]

    The 1099R I got from my bank includes both the Required Minimum Distribution from an IRA plus some Qualified Charitable Deductions I also did all rolled together into one amount.  This is my first year trying the QCD option. Although the QCD's are actually more than the RMD (a separate story), TurboTax is deducting the whole 1099R amount from my Taxable Income. This is after I correctly answered the TT question about how of the 1099R was the RMD.  Does this sound like a software glitch in TT? The amounts are not huge but I am concerned about a possible audit flag. Years ago I mis-entered some 1099R info in TT and the IRS jumped on it later on. Thanks for any info.

[ThomasM125]

The taxability of the distribution listed on your form 1099-R will depend primarily on the amount entered in box 1 and 2 and the codes listed in box 7, and secondarily to the answers you give to the questions asked after you enter the form. Can you clarify if there is an amount listed in box 2(a) and what codes are in box 7 please?

[dmertz]

On the pages that follow the entry of the details from the Form 1099-R, you must mark the box or answer the question that indicates that you had a portion of your distribution paid by your IRA custodian to charities.  TurboTax will then ask how much of the distribution went directly to the charities.  TurboTax will exclude this amount from the amount on Form 1040 line 4b and will include the notation "QCD" next to the line.

("QCD" = "Qualified Charitable Distribution", not "Qualified Charitable Deduction")

[Mike9241]

Turbotax is doing it correctly since QCDs reduce the taxable amount.  that's their purpose. as a trade-off you lose deducting the amounts on schedule A for charitable contributions. 

[hanknjoyce]

  My concern (and I will stop after this..) is I do not understand how TT can deduct more than my RMD. When I set up the QCD deductions early in 2022 I assumed my RMD would be larger because of some funds I transferred to my IRA in late Jan 2022. I did not find out until late December 2022 that, even though the funds were transferred in and my account got bigger, my RMD was based on my account numbers as of Dec 2021. So I wound up giving twice as much to charity in 2022 as my actual RMD. I am bothered that the folks holding my IRA did not say something in the many discussions we had, but they are not tax professionals and perhaps the blame is on me for not realizing the error.

I have an appt with a tax professional but not until April 3 due to some family support travel we have to do the the next several weeks.  I am thinking of simply filing now before the IRS gets inundated, take my modest refund and amend the filing later if it turns out I erred.

  I appreciate the feedback. Thanks.

[dmertz]

QCDs are not limited to RMDs.  The limit on annual QCDs is $100,000 no matter how much of an RMD you have to take.  Those over age 70½ but under RMD age can also make QCDs.

[hanknjoyce]

Wow - Thanks! That really explains it well and simplifies my world. 

Hank