1099-R with charitable direct contribution INCLUDED - now what?

[Catherine]

I have a 1099-R for a 2024 distribution, which shows a distribution amount in Box 1, same amount in Box 2, and a "taxable amount not determined" in Box 2a.  At the bottom of the form, it also states: "$X of the above distribution was a direct distribution to charity under IRC Section 408 (d) (8)." 

My guess is that I deduct the direct charitable contribution from the Box 2 taxable amount (and state distribution amount), yes? 

I have never seen this before; what I have seen is direct charity not being listed at all and not included in any of the distribution boxes. A new thing in general, or just these people (TIAA) and this account in particular?

[kathyc2]

I've seen a few 1099R's with an accompanying letter stating the QCD, but never on the actual form.  What box # was it reported in?

[Lee B]

Catherine, assuming you still use Drake, you enter the gross amount in Box 1 and Box 2.

Then click the link at the top of the entry screen that says "special tax treatments" and enter the amount of the QCD on that page.

 

45 minutes ago, Catherine said:

 

My guess is that I deduct the direct charitable contribution from the Box 2 taxable amount (and state distribution amount), yes? 

If you do this you may trigger a CP 2000

[BulldogTom]

3 hours ago, Lee B said:

If you do this you may trigger a CP 2000

This ^^^^^^^^

Don't mess with the matching process.

Tom
Longview, TX

[Randall]

12 hours ago, Lee B said:

Catherine, assuming you still use Drake, you enter the gross amount in Box 1 and Box 2.

Then click the link at the top of the entry screen that says "special tax treatments" and enter the amount of the QCD on that page.

 

 

ATX has this feature too.  It's at the bottom of the input screen.  Input the amounts on the 1099-R as is.  Then back it out,  It should flow to 1040 correctly.

[Catherine]

16 hours ago, kathyc2 said:

I've seen a few 1099R's with an accompanying letter stating the QCD, but never on the actual form.  What box # was it reported in?

No box - it was a separate sentence under all the boxes. So weird.

[jklcpa]

There is no box or code for the QCD to be reported on the 1099R. Taxpayer should have also received acknowledgement from the charity with the details. You should make sure that the client didn't include that amount in with their other charitable deductions.

[Abby Normal]

3 hours ago, jklcpa said:

There is no box or code for the QCD to be reported on the 1099R. Taxpayer should have also received acknowledgement from the charity with the details. You should make sure that the client didn't include that amount in with their other charitable deductions.

I wish the IRS had made the QCD a subtraction on the Sch A so it was clearer what was going on. Also, adding a box to the 1099R for QCDs would help.

[Lee B]

30 minutes ago, Abby Normal said:

I wish the IRS had made the QCD a subtraction on the Sch A so it was clearer what was going on.

I not sure how that would work in combination with the standard deduction?

I would like to see it be an adjustment to Income on Schedule 1

[Catherine]

7 hours ago, jklcpa said:

their other charitable deductions

None, in this instance. 

[JohnH]

It's up to the taxpayer to determine the amount of QCD to be deducted from the 4a entry in arriving at the 4b entry.  Neither the charity nor the IRA trustee will accept responsibility for this adjustment. Thus, the 1099R will always be marked as "Taxable Amount Not Determined."  Likewise, the charitable organization will not indicate which contributions are QCD's (although some will provide a footnote the the effect that all or part of the contributions may be, but consult your tax advisor regarding the actual amount).  QCD's are simple to do and valuable to borderline non-itemizers, but there is some responsibility to keep track of the amounts.

[Sara EA]

5 hours ago, Abby Normal said:

I wish the IRS had made the QCD a subtraction on the Sch A so it was clearer what was going on. Also, adding a box to the 1099R for QCDs would help.

A Sch A deduction would be of no benefit to the majority of retirees who don't itemize, plus it wouldn't reduce AGI for state tax calculations.  I've pondered why the 1099R doesn't show a QCD.  All I can come up with is that most IRA custodians make the check out to the charity but send it to the taxpayer to pass on.  Since the custodian has no idea if the taxpayer did so in a timely fashion, they wouldn't be able to put the amount in some box on the form.  Any other ideas?

[JohnH]

3 minutes ago, Sara EA said:

A Sch A deduction would be of no benefit to the majority of retirees who don't itemize, plus it wouldn't reduce AGI for state tax calculations.  I've pondered why the 1099R doesn't show a QCD.  All I can come up with is that most IRA custodians make the check out to the charity but send it to the taxpayer to pass on.  Since the custodian has no idea if the taxpayer did so in a timely fashion, they wouldn't be able to put the amount in some box on the form.  Any other ideas?

The custodian also doesn't know if the recipient is a qualified charity.  They ask the question, but they depend upon the taxpayer to do their own homework in this regard.  I'm sure the custodians don't want to accept that responsibility.  Also, many custodians will send the check directly to the charity if the customer requests.  

 

Edited March 15 by JohnH
added info,

[Randall]

Another quirk about the QCD I recently learned.  The age for RMDs went up recently to 73 (I think).  But the eligiblity age to do QCDs did not go up.  So more confusion on the part of the clients to do or not do the QCDs. 

[Catherine]

Mostly I have found in previous years that at best, the client gets a letter from the custodian stating "we sent $x to charity y as a QCD, as you requested." But the amount does not get included on a 1099-R, even as an addendum/detail added. Or the amount does get included in the 1099-R, and the clients then don't give any QCD info to me, and there is no adjustment made because you can't adjust something you know nothing about. 

This detail at the bottom was the first I'd seen, and what I needed was the referral to the special tax treatment section that I did not know about, and for which I thank Lee B.

[kathyc2]

4 hours ago, Randall said:

Another quirk about the QCD I recently learned.  The age for RMDs went up recently to 73 (I think).  But the eligiblity age to do QCDs did not go up.  So more confusion on the part of the clients to do or not do the QCDs. 

I encourage clients to start paying charities out of IRA's at age 70 1/2.  Not only are they getting money from IRA tax free, it will lower RMD's when they set in.

[Abby Normal]

20 minutes ago, kathyc2 said:

paying charities out of IRA's at age 70 1/2

Why not 59 1/2?

[jklcpa]

16 minutes ago, Abby Normal said:

Why not 59 1/2?

Law says 70 1/2.

[Catherine]

On 3/15/2025 at 12:42 PM, jklcpa said:

Law says 70 1/2.

Oh, and like that is supposed to be a good reason, Judy?