Generally speaking, a qualified charitable distribution (QCD) is:
- A nontaxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) that is owned by an individual who is age 70½ or over.
- The QCD is paid directly by the trustee of the IRA to an organization eligible to receive tax-deductible contributions
- The QCD will count towards the individual’s required minimum distribution.
- The maximum annual exclusion for QCDs is $100,000. Any QCD in excess of the $100,000 exclusion limit is included in income as any other distribution.
- If you file a joint return, your spouse also can have a QCD and exclude up to $100,000.
- See IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) for additional information.
Can a qualified charitable distribution satisfy my required minimum distribution from an IRA?
Yes, your qualified charitable distributions can satisfy all or part the amount of your required minimum distribution from your IRA. For example:
- if your 2019 required minimum distribution was $10,000, and you made a $10,000 qualified charitable distribution in 2019, you would have satisfied your 2019 required minimum distribution.
- if your 2019 required minimum distribution was $10,000, and you made a $5,000 qualified charitable distribution in 2019, you would have had to withdraw another $5,000 to satisfy your 2019 required minimum distribution.
How are qualified charitable distributions reported on Form 1099-R?
Charitable distributions are reported on Form 1099-R for the calendar year the distribution is made.
How do I report a qualified charitable distribution on my income tax return?
To report a qualified charitable distribution on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter “QCD” next to this line. See the IRS Form 1040 instructions for additional information.
You must also file Form 8606, Nondeductible IRAs, if:
- you made the qualified charitable distribution from a traditional IRA in which you had basis and received a distribution from the IRA during the same year, other than the qualified charitable distribution; or
- the qualified charitable distribution was made from a Roth IRA.
- The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income.
Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution. For more information, see Records To Keep in IRS Pub. 526 on page 19.