RMD's & QCD's

[BOBOT]

I'll be subject to RMD's from my IRA in a few months. We don't need the income so are thinking of using it-or some of it-for our charitable giving, thereby lessening the tax hit.
The funds are with Vanguard, and I know they will handle it per our instructions, but can't find a source for info on which charities are "qualified", or how we go about setting this up.


Any experience with this?

 

[kaneohe]

501(c)(3) orgs, blessed by the IRS https://www.fidelity.com/building-savings/learn-about-iras/required-minimum-distributions/qcds

https://apps.irs.gov/app/eos/allSea...=orgName&isDescending=false&submitName=Search
In the search field, enter search by NAME

You'd need to call VG to get their process. It used to be pretty cumbersome involving a long phone call but apparently has been streamlined recently but I believe still needs your involvement.

With some other places,,I just send a letter giving the names/amounts desired, period. They send the checks back to me and I check them then. If you have a fair number of checks, it's easy to edit previous yrs letter of instruction and let broker do the work of preparing the checks.

I got the impression that VG is(was) not confident it can do that process w/o mistakes so it want you involved while they prepare the checks. One or two,ok. Much more and it seems time consuming.

 

[Souschef]

I have a lot of experience with QCD's. You can donate to any recognized charity or religious institution.

This year my donations were to the following:
The religious place I attend
A Doberman Rescue Kennel
A group the restores and flies WW2 aircraft
Civil Air Patrol


The main thing is that the donation has to go directly to the charity. Any brokerage should have a form that you fill out with the name of the charity. The check is made out directly to the charity. You can have the check mailed to your place, then forward it to the charity. That way you can save the check stub as proof of the donation.

 

[gerntz]

I'll be subject to RMD's from my IRA in a few months. We don't need the income so are thinking of using it-or some of it-for our charitable giving, thereby lessening the tax hit.
The funds are with Vanguard, and I know they will handle it per our instructions, but can't find a source for info on which charities are "qualified", or how we go about setting this up.


Any experience with this?

In close to same position. We opened an IRA checking account with Schwab & will write the checks on it directly to the charities. Still MUST get acknowledgement letters on the amount given to report on tax return as gift, not RMD income.

 

[Coolius]

How does the Company holding the IRA ( Vanguard, etc ) report the QCDs?



Would the tax reporting show a taxable amount equal to original RMD less QCD checks? Is this assumption correct?


As such, I should not be able to claim anything on my tax return, correct?


Thanks for clarifying. I am not yet at RMD stage, but fully intend to do QCDs when my time comes.

 

[gerntz]

How does the Company holding the IRA ( Vanguard, etc ) report the QCDs?



Would the tax reporting show a taxable amount equal to original RMD less QCD checks? Is this assumption correct?


As such, I should not be able to claim anything on my tax return, correct?


Thanks for clarifying. I am not yet at RMD stage, but fully intend to do QCDs when my time comes.

Why not ask your IRA holding firm?

 

[Souschef]

How does the Company holding the IRA ( Vanguard, etc ) report the QCDs?

Would the tax reporting show a taxable amount equal to original RMD less QCD checks? Is this assumption correct?
As such, I should not be able to claim anything on my tax return, correct?

Thanks for clarifying. I am not yet at RMD stage, but fully intend to do QCDs when my time comes.

In my experience, all you get is a 1099 indicating how much you withdrew. In my case, only some of it was QCD's. I use Turbotax, and the program specifically asks you about QCD's. On 1040 line 15a the total of the 1099's will be listed. On line 15b the taxable amount will be listed. Between the line 15a and 15b the letters QCD are indicated..

 

[Coolius]

In my experience, all you get is a 1099 indicating how much you withdrew. In my case, only some of it was QCD's. I use Turbotax, and the program specifically asks you about QCD's. On 1040 line 15a the total of the 1099's will be listed. On line 15b the taxable amount will be listed. Between the line 15a and 15b the letters QCD are indicated..

Thanks Souschef. That 1099 information is what I was anticipating - line 15a minus QCD equals line 15b ( the taxable portion ).


Seeing as the QCD amount is already excluded from the RMD 1099, it means I cannot deduct it within itemized deductions.


Good to know when I finally start the process.

 

[kaneohe]

Thanks Souschef. That 1099 information is what I was anticipating - line 15a minus QCD equals line 15b ( the taxable portion ).


Seeing as the QCD amount is already excluded from the RMD 1099, it means I cannot deduct it within itemized deductions.


Good to know when I finally start the process.

The 1099R reports your RMD and other distributions like it would as it would if you took a withdrawal. It does not deduct the QCD from the reported distribution. You (or the software )must perform the arithmetic to get the proper 15b amount and code it w/ the QCD notation.

 

[Coolius]

The 1099R reports your RMD and other distributions like it would as it would if you took a withdrawal. It does not deduct the QCD from the reported distribution. You (or the software )must perform the arithmetic to get the proper 15b amount and code it w/ the QCD notation.

Ah, OK. Thanks for the clarification. So does the QCD deduction go into the itemized section of the tax return, or is it simply subtracted from the RMD reported amount?


If it has to be reported on the itemized section, I could save some paperwork by simply writing a check from a taxable account, and not bothering with the QCD at all.

 

[Souschef]

BUT there is a big difference! The QCD does NOT go into 1040 Schedule A, it is subtracted from the amount on line 15a to get the taxable amount on line 15b. Since the standard deduction has been raised, you may not have enough deductions to pass the standard deduction. The QCD comes right off the RMD, regardless of your other deductions.
There is no way I can have enough deductions to meet the standard deduction this year,

 

[audreyh1]

The 1099R reports your RMD and other distributions like it would as it would if you took a withdrawal. It does not deduct the QCD from the reported distribution. You (or the software )must perform the arithmetic to get the proper 15b amount and code it w/ the QCD notation.

Right, that was my understanding. You need the documentation from the qualified charities contributed to in order to back up your QCD claim if ever audited.

 

[jebmke]

QCDs cannot be directed to some 501(c)(3) entities -- Donor Advised Funds, for example. I believe some foundations are also excluded.

 

[BOBOT]

Thanks for all the replies so far. The info from Fido is more helpful than the VG site, and as it seems to be a bit of a PIA to set up I guess I'll have to actually talk <gasp!> to a live human.

 

[audreyh1]

Thanks for all the replies so far. The info from Fido is more helpful than the VG site, and as it seems to be a bit of a PIA to set up I guess I'll have to actually talk <gasp!> to a live human.

I think Fidelity might let you write checks on your IRA to a qualified charity?

 

[misanman]

Thanks for all the replies so far. The info from Fido is more helpful than the VG site, and as it seems to be a bit of a PIA to set up I guess I'll have to actually talk <gasp!> to a live human.

We do QCDs from our Fidelity account and it's really pretty simple. Not sure what the issue could be.