Charitable IRA Donation

[Christian]

A client has chosen to donate a portion of his annual MRD from his IRA account to charity. Will the fiduciary indicate this on his 1099-R form for the year ? 

[Margaret CPA in OH]

My 1099's from Fidelity do not indicate this and have not for the last few years.

[Lee B]

It hasn't shown up on my own 1099 or on the 1099s of several clients who also make QCDs.

I make copies of the fiduciary QCD Documents including the checks, plus the charities usually indicate on their acknowledgement letter

that it's a distribution from an IRA.

[mcb39]

11 minutes ago, cbslee said:

It hasn't shown up on my own 1099 or on the 1099s of several clients who also make QCDs.

I make copies of the fiduciary QCD Documents including the checks, plus the charities usually indicate on their acknowledgement letter

that it's a distribution from an IRA.

Good Question.  I have a client donating in excess of $30,000 this year; his entire RMC.  Strange that they wouldn't have a code as these seem to be becoming more popular.  Document! Document! Document!

[Lee B]

Ideally the fiduciary would report the total distribution in Box 1 and the taxable amount in Box  2a, net of the QCD.

However there are so many potential variables which go into determining the taxable amount that fiduciaries leave Box 2a blank.

[Sara EA]

I don't think there's a box on the 1099R to indicate a qualified contribution.  (Box 7 won't do it because there is no room for the dollar amount.)  At any rate, typically the fiduciary sends the CLIENT the check, payable to the charity, and cannot know if the client ever turned it over to the charity.  In UltraTax you enter the 1099R as usual and below there is a screen to enter the Qualified distribution and amount.  It enters QCD to the left and subtracts the amount from taxable income.  Does ATX have a code line for this?

[Margaret CPA in OH]

Yes, ATX has the place to indicate QCD and the amount of the distribution that was donated.  As my church's treasurer we have received several checks from the fiduciary, some stating purpose but not that it was a QCD.  The donor indicated via email.  I have my church donation sent to me made payable to the church and I deliver it.  I have had the others mailed directly to the charities.  None of the checks indicated QCD.  I have the acknowledgement letters and report the total of the distributions on the 1099R data entry screen.

I ask those clients who may have given QCD amounts for copies of the acknowledgements 'to be sure I indicate the correct amount of the distribution that is not taxable.'

[Gail in Virginia]

Box 7 could be used if the fiduciary issued two separate 1099Rs, just like they issued separate checks.  And if the check is payable to the charity, and clears the bank, I would think that is pretty indicative that it reached the charity.  Banks have gotten pretty cautious about cashing checks for people that are not made out to people.  At least they have around here. 

[TexTaxToo]

I believe that IRA trustees have pushed back against any requirement that they determine whether the contribution is to a qualified charity - and they have no way of knowing if the beneficiary received anything of value in return for the donation.

[mcb39]

My client is splitting his between three charities.  It will be interesting to see what his 1099 looks like.  He consulted me about this several months ago and has it clearly documented.  

[Margaret CPA in OH]

It will be interesting.  What is the fiduciary?  I split mine among 4 charities in the past.  The 1099R from Fidelity just showed the full distributed amount with no tax withheld.  I entered the QCD on the worksheet and QCD showed up in the right place.  I do have a second amount from a 403(b) in TIAA-CREF so the total distributed was higher than the taxable amount.

[Lee B]

It doesn't matter whether it's one QCD Distribution or six QCD Distribution. My 1099 R from Charles Schwab doesn't give any indication of how many or how much.

[Christian]

Sure am glad I asked the question. Margaret can you access the QCD screen from the 1009-R entry form ? That will solve the problem I am sure.

[Margaret CPA in OH]

Yes, just scroll down a full screen (in ATX).  Under Conversions From Traditional, SEP, or SIMPLE.... 2 lines more has a checkbox to Check box if qualified charitable distribution (QCD) and enter qualified charitable distribution amount.

Over the years I am constantly finding how many screens have so much more to see if one just scrolls up or down.  For such a relatively inexpensive program (despite some faults and less than stellar support), I really think ATX has so many features, more than I know how to manage even after 26 years with it.  It pays to just browse around sometimes, something I'm trying to instill in the office admin at church with the membership database.

[Catherine]

We have our clients bring the instruction letter to the fiduciary and/or the check stub and/or the letter from the fiduciary. One of them, somewhere, says something pertinent. When I was a church Treasurer, I always made sure donors got those fiduciary letters for their records. They say something on the order of "here's $2,000 from the IRA of John Smith made out to First Parish Church Temple of the Blessed Heart."