Jan 28, 2019 QCD- Important news regarding tax preparation for 2018.

Important news regarding tax preparation for 2018

Did you make a Qualified Charitable Distribution (QCD) from your IRA in 2018?

If you gifted to a qualified charity directly from your IRA in 2018 there are steps you need to take to make sure it gets reported properly on your taxes.

You will receive a 1099R tax form from your IRA custodian that will give you the total amount that was taken from your IRA for the year.  It will NOT break out the portion that went directly to charity.  The portion that went directly to charity is not taxable.

You will need to track down receipts from the charities that received the money, sum up the total, and let your tax preparer know the amount that was given to charities.  The receipts should be kept in your records as support in an audit.

If you do not communicate that the gift was directly from the IRA, your tax preparer may assume that you did not do a gift from your IRA and report it in a different manner.  Most likely, you will pay more in taxes.

To self report a qualified charitable distribution on your Form 1040 tax return, you generally report the total taken from the IRA on the line for IRA distributions (Line 4a). The amount gifted directly from the IRA to charity will be subtracted from the total and the remaining amount will be reported as the Taxable amount on line 4b. Enter “QCD” next to this line. See the Form 1040 instructions for additional information.

If you would like to confirm the amount that was sent directly from your IRA’s to help track down your receipts from the charities, please give us a call at Leonard Rickey Investment Advisors.

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