How do I report a QCD with the IRS so I don’t pay taxes on a charitable distribution from my IRA?

A&I Wealth Management > faq > How do I report a QCD with the IRS so I don’t pay taxes on a charitable distribution from my IRA?

Question: How do I report the money I sent to charity out of my IRA so that money isn’t included in my adjusted gross income?

Answer: 1040 line 4a

A lot of people have that question at this time of year. When you receive your 1099-R, the financial custodian reports the amount of money that was distributed from your IRA. They do not specify whether it was a withdrawal or a tax-free transfer to a charity.

When you file your Form 1040, you report the total distribution on line 4a. Then report any normal taxable distribution amount on line 4b. Enter “QCD” to indicate that the remaining amount is a qualified charitable distribution, which is not taxable. If you had contributed your full IRA distribution to charity, you would write $0 and “QCD” on line 4b.

Keep an acknowledgement from the charity showing that it received your contribution in your tax records.

The financial custodian will send a 5498 at the end of May every year. They will post this form online on the same date. Keep this for your records if you should ever need proof for the IRS. There is not any error and this question comes up every year during tax filing.

Qualified Charitable Distribution (QCD)

After you turn 70½, you can transfer up to $100,000 each year tax-free from your traditional IRA to charity, which counts as your required minimum distributions but isn’t included in your adjusted gross income. This is called a qualified charitable distribution, or QCD.

Sample 1040 for a QCD

Let’s say you made $14,500 total IRA distributions this year. You made a $10,000 QCD to a charity. You would complete tax form 1040 as shown below. In line 4a, you write the total distributions. In line 4B, you write $4,500 for the taxable amount and add the note, “QCD” to explain that the difference was a qualified charitable distribution.

QCD goes in box 4a on IRS form 1040



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    About the author

    Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.