Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
If you made a qualified charitable distribution (QCD) from your IRA in 2023, reporting it on your 1040 or 1040-SR can be tricky.
Individuals 70½ and older could transfer up to $100,000 in 2023 from a traditional IRA directly to charity. The cap for 2024 is $105,000 because the Secure Act 2.0 retirement law provides for annual inflation indexing of the $100,000 original cap, starting this year. These charitable gifts can count as all or part of your required minimum distribution (RMD). But you’re not taxed on them, and they are not added to your adjusted gross income.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you did a QCD in 2023, the 2023 Form 1099-R that you received this year won’t reflect the QCD. It will show only the total amount of distributions made from the IRA in 2023 because IRA custodians lack firsthand knowledge to discern whether a particular payout from a traditional IRA meets the QCD rules.
When filling out your 2023 Form 1040 or 1040-SR, include on line 4a the total amount of distributions reported on Form 1099-R. Then you subtract the amount that was transferred directly to charity and report the remainder (even if it’s $0) on line 4b. Write “QCD” next to line 4b so the IRS knows why the numbers don’t match. If using tax software, a drop-down box for line 4b should give you a choice to click QCD.
If you itemize on Schedule A, be sure not to deduct the QCD amount. That would be double-dipping.
Similar rules apply to tax-free rollovers from IRAs. Again, the 1099-R will show the figure rolled over from the IRA as part of total distributions. On your 1040, include the full distribution amount on the 1099-R on line 4a. Subtract the rollover and report the remainder, if any, on line 4b. Write “Rollover” next to line 4b.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
-
Colorado Sending Billions in TABOR RefundsState Tax Are you receiving a TABOR refund with your 2025 Colorado state income tax filing? Don’t miss the deadline.
-
How a Financial Adviser Can Help You Sleep at NightWhen it comes to your money and planning for your retirement, legacy and more, you might need a professional to help you stay on top of it all.
-
Harris vs. Trump's Tax Wish List: Income Tax, Capital Gains, Estate Tax and MoreThe Tax Letter Take a comprehensive look at Harris and Trump's tax proposals. We cover income tax rates, tax credits and deductions, capital gains tax, estate tax, corporate tax and much more
-
Will lower mortgage rates bring relief to the housing market?The Kiplinger Letter As mortgage rates slowly come down here's what to expect in the housing market over the next year or so.
-
What are Harris' and Trump's Positions on Capital Gains Taxes?The Tax Letter Harris and Trump have different views on taxing capital gains. See what each candidate wants to do if elected to the White House.
-
Changes to Estate Tax Are Coming... Six Options Congress Could TakeThe Tax Letter An important estate tax change is looming. Here are six ways that Congress might address estate taxes in 2025.
-
Aging in Place Will Be Big Business for Home BuildersThe Kiplinger Letter Many people will be looking to make their homes aging-friendly in the years to come.
-
A Look at Kamala Harris's Tax Plans Ahead of the ElectionThe Tax Letter Under Harris's tax proposals, upper-income individuals would pay more taxes, while the middle class and lower-income people would pay less.
-
A Look at Donald Trump's Tax Plans Ahead of the ElectionThe Tax Letter We take a look at Donald Trump's tax plans and what they could mean for you. Here's what you need to know.
-
Understand These Hobby Loss Rules to Reduce IRS Audit RisksThe Tax Letter The IRS will scrutinize tax returns reporting large losses from any activity that sounds like a hobby. Here is what you need to know.
