Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

TAX REPORTING OF YOUR QUALIFIED CHARITABLE DISTRIBUTION

The ability to transfer up to $100,000 each year from your IRA to charity tax-free, have it count as your Required Minimum Distribution (RMD) and have it not included in your adjusted gross income is now a permanent part of federal tax law. As a result it is important to understand how a Qualified Charitable Distribution should be reported to the IRS. The gift should be reported on IRS Form 1099-R, which you should receive from the IRA administrator. The gift should also be listed on line 15a of your Form 1040 as a gross distribution from your IRA. On line 15b, write $0 for the taxable amount (if you don’t have any taxable distributions from your IRAs for the year). Add “QCD,” for “qualified charitable distribution,” next to that line to show why the distribution is tax-free. If only part of your distribution was a QCD, put the taxable portion on line 15b and still add “QCD” to explain the difference between line 15a and 15b. It is recommended that you keep an acknowledgement of the gift from the charity in your tax files. If you do not receive one you’ll need to let the charity know to send you the receipt. Keep the 1099-R form and the acknowledgement of the gift from the charity in your tax files.