RMD sent via QCD results in error flag on review

[merkelwdm]

On my 1099-R from a traditional IRA, I transferred the entire RMD directly to a charity. I initially entered $0 into line 2a (all other annotations correct marked) and of course TT flagged it as an error in the review. I had properly marked the check block for QCD and entered the entire amount.  I fully understand I can not claim both a QCD and a charitable deduction. To fix the flagged error, I put the entire QCD amount in block 2a. Here's what I need help understanding.... why did my tax burden then go UP by about 20% of the RMD/QCD?  I expected it not to change since none of the QCD is ultimately taxable.

[Mike9241]

line 2a should be what's on the actual form

there is a section later on that asks the amount of the distribution (line 1) that is the RMD, This must be entered, Later it asks about the amount of the QCD made which can not exceed the RMD amount you entered. . 

[merkelwdm]

Thank you for replying, but that was not my question. I'm good with the procedures as you outlined and have followed them. My question is "why did my tax burden go UP when I changed block 2a from $0 to the total amount of the RMD which was transferred" even with the other blocks checked as you pointed out. The increase was suspiciously close to 20% percent, i.e. aligned with the tax bracket which I must be in.  Thank you again for working with me on this.

[RogerD1]

Did your 1099-R have a code Y in box 7 indicating that some or all of the distribution was a QCD?  That code is new for 2025 1099-R forms.

When I was on the page entering the numbers for the 1099-R, I experienced the same thing that you saw with your tax liability increasing, but adding the code Y reversed out that tax liability.  When I got to a screen "How much did [custodian name] transfer directly to charity?", it had put the full amount of the distribution in there.  This amount can be adjusted to the actual QCD amount to get the correct amount of taxable income for this distribution.

Once you get the QCD amount entered in, the Form 1040SR will show box 4a as the total distributions and 4b as the taxable amount - the difference between these two should be at least as great as the amount of the QCD.  Line 4c will have the QCD box checked.

[Sasha07TTid]

I have made a qualified charitable contribution from my IRA and I have a shortfall in my RMD. Turbotax is adding the QCD to the shortfall and increasing my penalty & the tax I have to pay. I have reentered the forms multiple times, nothing corrects this error. The software cknowledged the 1099 R for the QCD as QCD and said this will be documented as such; but , later on, when I go to fill the 5329 for the shortfall, the QCD has been added to the shortfall. All the agents tell me that I need a tax expert; 2 tax experts wasted 3 hours of our time and did not even look at this part. I tried entering on line 1 in the section asking what the required RMD the actual QCD amount; but this just ended up increasing the total RMD by that amount and hence did not correct the error. I have spent probably 24 hours talking the agents; none of them know what to do. Any other suggestions? Thanks