IRA distributions to charity
I have a client who had 230,000 of AGI last year, which triggered an AMT of $5,500. His income included a $53,000 IRA RMD. This year he needs to take $60,000 in RMD, but everything else will be the same. If he directs a portion of his RMD to charity, will his AMT be reduced? Also, how are IRA providers coding the 1099s since PPA 2006 allows taxpayers to direct RMDs to charity?
Permalink Submitted by Alan Spross on Fri, 2007-11-09 03:28
There is no special 1099R reporting for QCDs, they are just reported as normal distributions. The taxpayer then shows “QCD” next to line 15b of Form 1040 similar to IRA rollover reporting. The remaining taxable amount shows on 15b. If Congress extends these for more than a year, you might see special 1099R coding developed.
If client makes a significant QCD, it will reduce both his regular taxes and the AMT calculation, but there is not enough info to know whether it will reduce the $5,500 difference (eg how his itemized deductions will be affected by the reduced AGI).
Permalink Submitted by Darcy Smith on Fri, 2007-11-09 05:37
[quote=”[email protected]“]There is no special 1099R reporting for QCDs, they are just reported as normal distributions. The taxpayer then shows “QCD” next to line 15b of Form 1040 similar to IRA rollover reporting. The remaining taxable amount shows on 15b. If Congress extends these for more than a year, you might see special 1099R coding developed.
If client makes a significant QCD, it will reduce both his regular taxes and the AMT calculation, but there is not enough info to know whether it will reduce the $5,500 difference (eg how his itemized deductions will be affected by the reduced AGI).[/quote]
Thanks! What info would you need in order to know if it will reduce the $5500 difference?
Permalink Submitted by Al Fry on Fri, 2007-11-09 15:26
Just run two hypo tax returns, ne with the QCD, one with the RMD.