A QCD must be made under certain circumstances and is reported in a particular way on the tax return. It must come from an IRA and be reported as such on those screens. This will indicate to the IRS that you donated.
A QCD 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
Can I make a QCD?
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.
First, be sure that the distribution is from and IRA and that the IRA box is checked in the program. As you continue in the interview section, you will encounter the screen.
As you continue with the interview screens, you will be asked if you donated a portion or all of the distribution to charity. There are eligibility requirements. TurboTax will exclude this amount and will show the notation QCD
