Taxable amount on 1099-R does not account for QCD’s

Home Fairmark Forum Retirement Savings and Benefits Taxable amount on 1099-R does not account for QCD’s

Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #5156
    starfish11040
    Participant

    I received my 1099-R for 2019. The total distribution and the taxable amounts are the same. I made substantial contributions to charities using QCD’s. I had expected that the taxable amount would be the total distribution less those contributions.
    How do I enter this?

    #5158
    dienerte
    Participant

    Your investment firm does not know whether or not you contributed to a qualified charitable organization. Therefore the amount reported on the 1099-R is your full distribution amount. It is up to you to report the RMD correctly by reporting both the full distribution amount on one line and the same amount less the QCD as taxable income on that same line to the right. If doing your return manually you must indicate to the left of the taxable amount the notation QCD. Most software programs will make that notation for you if you properly indicate the full and taxable amount and that there was a QCD.
    Tom D.

    #5161
    starfish11040
    Participant

    Tom,
    If I understand you correctly, you’re saying to put the total distribution on form 1040 line 4a and that amount less the QCD on line 4b. And the notation “QCD” to the left of 4b. Right?

    #5167
    dienerte
    Participant

    That is correct if you are manually preparing a paper return. As I indicated previously, most software programs will ask about a reduction to the taxable amount for a QCD and make the appropriate annotation somewhere on the return that a QCD was made. Its placement can vary based on the program. Tom D.

    #5168
    Alan S.
    Participant

    Note that if your IRA contains basis from non deductible contributions, you must complete Form 8606 EXCLUSIVE of the QCD to determine the taxable amount that goes on line 4b. This instruction recognizes that the QCD amount comes solely from the pre tax IRA balance, while the rest of the distribution is pro rated to reflect the IRA basis.

    In other words, the IRA Custodian ignores both your basis and the QCD in completing the 1099R, and the taxpayer is responsible for applying both of these variables.

    • This reply was modified 1 year, 8 months ago by Alan S..
Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.