RMD used as Charitable Contribution

[Bonnie]

I have a taxpayer who used RMD for charitable contributions in 2019 to several different non-profits and she is telling me it's non taxable, because checks were written directly to the non profits. I've searched for something that tells me this is true and cannot find anything. I've never heard of this before so reaching out to others. Can you enlighten me on this please

[New York Enrolled Agent]

I have a taxpayer who used RMD for charitable contributions in 2019 to several different non-profits and she is telling me it's non taxable, because checks were written directly to the non profits. I've searched for something that tells me this is true and cannot find anything. I've never heard of this before so reaching out to others. Can you enlighten me on this please

Qualified Charitable Distributions have been here since about 2006. Do you take CE? Hard to understand how a paid preparer has never heard of this over the past 13 years or so.

[Bonnie]

Yes, I do take CEU and I have never had this come up in any that I have taken. The taxpayer has 1099R's issued for the RMD. Not sure how I handle not reporting this as income

[Lion]

Your tax software will have a way to designate an amount and put QCD on the line. The beauty is that it takes what would be taxable income and removes it from income. Of course, you do NOT get a deduction for the corresponding donation, but that's only useful for federal and only if you itemize. Your client still needs to keep acknowledgements as documentation. See IRS Pub. 590-B and
https://www.irs.gov/retirement-plans...ns-withdrawals
Make sure all your clients 70.5 and over know about this tax-saving method.

[RWG1950]

Miss Bonnie : Lion explained it well.
In my software, the data is entered on the 1099-R entry screen as normal, but then one needs to scroll further down where a box is checked that designates the amount as a QCD.
Hope you're staying safe.
Skoal

[Bonnie]

Thank you all so much for the help. This makes sense. In 27 years I've never had this come up until now. Always learning something new after all this time. And I do love learning. Yes staying safe. I work from home. No one comes into my office now. Drop off on table on front porch and pick up the same way by appointment only. Working well for me. Hopefully most finish this month. I really don't want to work half the summer but will do what it takes.

[EvenKeelTax]

I had to do one of those in 2012 for a client who gave &90k, his entire IRA, to a local cancer facility. I entered it correctly in my software, but he still got a letter from the IRS about it the following year. We responded to the IRS notice with the needed proof and solved it easily.