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Qualified Charitable Distributions from an IRA
Estate Planning Bulletin

02.01.2008

 
If you were one of those taxpayers at least age 70½ who directed your IRA custodian or trustee to distribute cash to your favorite charity during 2007, you might wonder what is happening when you receive a Form 1099-R showing the amount of the distribution as being made to you. The distribution is not taxable to you, but it does require that you or your tax return preparer make an additional entry on your Form 1040 for 2007. The amount of the distribution to the charity is to be listed on line 15a of the return. Assuming that you had no taxable distributions in addition to the charitable distribution, your return should show $0 in line 15b. In addition, you need to enter “QCD” next to line 15b. The QCD notation is the Internal Revenue Service shorthand for Qualified Charitable Distribution.

You should note that you cannot claim a charitable contribution for any QCD that is not included in your income. However, that was the reason for the temporary provision being added by Congress to allow you to withdraw funds from your IRA without paying tax on the withdrawal in exchange for the distribution to charity. The total QCDs for the year cannot be more than $100,000. (On a joint return, your spouse can also have a QCD of up to $100,000.) If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of the otherwise taxable income.

While this provision was added only for the years 2006 and 2007, the charitable organizations continue to press Congress to make it apply to additional years.

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