Qualified Charitable Distributions (QCDs)
How are QCDs reported on a tax return?
Total IRA Distributions are reported on line 4a of your 1040 tax form. On line 4b, the Taxable Amount is reported, less the value of any QCDs.
*Be sure to enter "QCD" next to Line 4b
The total IRA Distributions (line 4a) will come from your 1099R. Importantly, QCD amounts are not specifically identified in the 1099R – these values are self-reported.
What sort of documentation does Main Street Retirement provide for me?
Near the end of January, if you took a QCD in the preceding tax year, our office will send you a curtesy email with documentation of your QCD transactions. This information can be provided to your tax preparer and kept for your own records. The information will include: the account name and number, amount, and date of distribution(s).
What is a Qualified Charitable Distribution (QCD)?
We discuss the use of QCDs with clients when we approach Tax Planning in retirement. See the IRS web page on this topic. You are eligible to utilize a QCD once you reach the age of 70-1/2. A QCD can be taken from a Traditional IRA or an Inherited IRA.
QCDs can be especially useful tools once you reach RMD age and are charitably inclined. The proper use of a QCD can not only save income taxes by the exclusion of these distributions from your AGI, but also allow you to take the full Standard Deduction or Itemized Deduction from this lower AGI.