Qualified Contribution from IRA

Question

I am beginning to make Qualified Charitable Contributions from my IRA account.  The IRA is classified as an investing account so I can't figure out how to account for the monthly contributions.  The contributions will be made monthly directly from my brokerage account to the beneficiary.  How can I show the reduction in the balance of the IRA account and show the contribution for tax purposes?

Sceptic · Answer

@rod@ for a monthly QCD withdrawn from your IRA, I would just set up a "Withdraw" (not a transfer) transaction with a custom category such as "Charity-QCD".  It is important that this custom category have no tax code associated with it because it should not be reported on Sched A as a charitable contribution.  (Otherwise, you'd be "double dipping").  The important thing is that it be coded as a 1099-R on the tax schedule information as shown from the screen shot provided by NotACPA.

To make things a bit more automated, you can set up a monthly Withdraw reminder transaction.

* Payee: Name of the charity
* Category: Charity-QCD (or what ever you choose)
* Frequency: Monthly on distribution date
* Account: Your IRA account
* Type: Withdraw or MiscExp
* Amount: Your monthly QCD amount

You can also create custom reports for audit and verification purposes.

NotACPA · Answer

First off, what is the setting in the account for Transfers out?  It should be:

Next, you might need to sell securities to produce a cash position.  Securities can't be a QCD … only cash.

And, there's no, in Q, an ability to record the charitable event in a non-taxable account, so transfer the cash to a banking, or cash, type account.

Then, record the QCD in that banking account, using a Charitable Contrib type category that you've created.