1099R
I made a withdrawal from my Traditional IRA last year for $5,000.00 (I am over 70 1/2). From that $5,000.00 I had $1,000.00 go directly to my church as a chartibable contribution to them. The check was made payable to the church directly from the bank. I received my 1099R and they have my gross distribution in box 1 as $5,000.00, taxable amount in 2a as $5,000.00 and in box 2b it states “taxable amount not determined, yes”.
Am I going to run into problems with the IRS since only $4,000.00 should be considered taxable?
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 21:57
I would enter $5,000 on line 15a and $4,000 on line 15b of Form 1040
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 22:52
Tom is correct, however you also need to enter “QCD” next to line 15b. The instructions for this are on p 23 of the 2008 Form 1040 booklet. The 1099R is correct as issued.
This gets more complex if you have a basis in your IRA from non deductible contributions. You would then need an 8606, however the QCD portion is not subject to pro rate rules and is deemed to be totally funded by your pre tax IRA balance. You would need the 8606 to figure how much of the 4,000 is taxable, however.
Permalink Submitted by Anonymous (not verified) on Fri, 2009-02-20 00:37
Alan,
I am just curious. Do the various types of tax software allow the entry of “QCD” on the tax return as you have indicated? I have not run across this contribution situation using the TaxWise software in the AARP tax preparation program.
Permalink Submitted by Anonymous (not verified) on Fri, 2009-02-20 02:59
Tom, I can’t tell you because I do not have access to much tax software. However, given that the instructions are the same in the 2008 1040 instructions as they were in 2007, I would think that all but the most basic programs should support the “QCD” entry. If not, perhaps there is a way to provide this info in an explanatory statement. Since the QCD entry serves the same function as entering “Rollover” next to 15b, perhaps some programs access it using the same path???
While the QCD extension was not authorized by Congress until late in 2008, it should have been one of the more simple updates to most programs given the many other more complex changes.