How to Report a Tax-Free Transfer From an IRA to Charity

If you transferred your required minimum distribution from your IRA to a charity in 2016, your IRA administrator should have sent you a Form 1099-R. Report this transfer on line 15a of Form 1040; this counts as a gross distribution from your IRA. Write $0 as the taxable amount on line 15b. This is only if you do not have any taxable distribution coming from your IRA for the year. Next to this line, write: “QCD.” This stands for “qualified charitable distribution” and indicates why the distribution is tax-free. If only a portion of the QCD was part of the distribution, place only the taxable portion on line 15b, but still write “QCD” to explain the discrepancy between lines 15a and 15b.

At age 70 ½ you are required to start taking minimum distributions from certain retirement accounts. You may opt to transfer up to $100,000 per year from your IRA to a charity with no tax. This counts as the required minimum distribution but is not included in your gross income. For more information, visit with a financial planning professional or visit the IRS’s website.

See Kimberly Lankford, How to Report a Tax-Free Transfer From an IRA to Charity, Kiplinger, March 22, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.