RMD and QCD

[rocketguytwo]

Between my wife and I, we have several 1099R forms.  For each retirement account, we took out the required RMD (plus just a bit more).  In the case of the largest one, we did not take the distribution ourselves, but rather had the broker send money directly to several charities (i.e. QCDs), where the total was more than our RMD requirement.  

After entering all our information, we are getting a message under the banner "IRA Contribution Results" that says “Tax on excess accumulations in retirement account”, and the amount listed is about about 25% of the total amount we donated.  Am I correct that this is indicating that Turbotax thinks we did not actually take our RMD from this large account, and our taxes due was increased by this amount?

On our 1040 form, we see the total amount on line 4a, but line 4b (taxable amount) is a small number, and the QCD box on line 4c is checked; this makes it appear that TurboTax did recognize the QCD, which should have satisfied the RMD.

Can anyone explain what appears to be a contradiction?

[ReneV4]

Yes. It does appear that TurboTax is not recognizing that your QCD was taken from this large account. This could be due to how the entries were made, so here is some guidance on how to split your RMD and Charity in TurboTax. 

On your Form 1099-R, look for the Code used in Box 7. It might have a "Y" Code. If this code was used, it tells the IRS that the money was a distribution to charity. However, if you see Code 7, which means regular distribution, you will still be able to indicate how much of your distribution went toward charitable contributions. Here are the steps to follow:

1. Go to Income on the left panel within your TurboTax account
2. Select Wages and income summary located at the bottom of the drop down menu
3. Click Add/Edit to the right of IRA, 401(k), Pension Plan Withdrawals (1099-R)
4. Click on +Add a 1099-R Change how I enter my form box
5. On the next screen, select Edit to the right of your Form 1099-R with the QCD,  then Continue
6. Enter the details from your Form 1099-R, checking for which Distribution Code was used in Box 7 (or review if imported)
7. Next, check the, I have more than one value in Box 7 box and select Y from the drop down menu (to trigger the Charitable Contributions questions)
8. Ensure the IRA/SIMPLE/SEP box is checked, then Continue
9. Continue answering the questions, pressing Continue to advance
10. When you reach, Do any of these situations apply to you?, check the box that reads, I transferred all or part of this money directly to charity, Continue
11. Next, write in the total amount of your RMD (Don't include your donation amount yet)
12. Next, check the, Some of this distribution applied to the December 31, 2025 RMD and enter your RMD again
13. On the next screen, How much did your provider transfer directly to charity?, enter the amount of your total distribution that was your QCD, Continue
14. Continue answering questions. When you reach, Let's go over any required...(RMD), click Continue (not the pencil) 

Note: The above steps should clear the error, but it may be necessary to delete Form 5329 that was already triggered by doing the following:

1. Go to Tax Tools on the left hand panel inside of TurboTax
2. Click on the down arrow and scroll down to Tools
3. Click on Tools and select Delete a form from the menu items that appear in the Tool Center
4. Click on the trash can icon to the right of Form 5329