How to do QCD with HR Block Deluxe??

[vtMaps]

I did a QCD in 2022 (first time) and am trying to understand how to do the taxes with HR Block software.

I took a $9,500 taxable distribution from an inherited (non-spouse) IRA. I also made a $500 QCD from the account.

The 1099-R has:
Box 1 Gross Distribution $10,000
Box 2 Taxable amount $10,000
Box 2b "Taxable amount not determined" is checked
Box 7 Distribution code is 4
IRA/SEP/Simple has a checkmark

I am using HR Block Deluxe. How do I tell the software that only $9,500 is taxable on line 4b of form 1040? I tried telling the software that Box 2 on the 1099-R was $9,500 and Form 1040 still has $10,000 on line 4b.

Thanks, in advance,
--VtMaps

[mageedge]

Not familiar with Block software specifically but - generally you would use box 2a to report taxable income of $9500 and then, as you proceed in the software, you should have the option of reporting "non-taxable distributions" with one of the options offered being QCD. This is where you would include the QCD. The software will not write "QCD" on your 1040 but will transmit the information to the IRS

[prd1982]

Put the 10,000 in both the total and taxable boxes; ignore the $500 charitable deduction for now. Just keep working through the interview. The program will ask you about a QCD after you finish with the 1099. It will ask if you did a full or partial QCD; say partial. Then you get to specify the $500 contribution. If you then go to forms view and look at the 1040 lines 4a/5a, you will see QCD.

Edited: I had misread the original question. Box 1 & 2 get the total value.

[jebmke]

Put the 9,500 in both the total and taxable boxes; ignore the $500 charitable deduction for now. Just keep working through the interview. The program will ask you about a QCD after you finish with the 1099. It will ask if you did a full or partial QCD; say partial. Then you get to specify the $500 contribution. If you then go to forms view and look at the 1040 lines 4a/5a, you will see QCD.

9,500 or the 10,000 of the distribution reported on the 1099-R?

Seems to me if you put in $9,500 as the gross amount there will be matching error when they fire up the WOPR at the end of the year.

[RetiredAL]

I did a QCD in 2022 (first time) and am trying to understand how to do the taxes with HR Block software.

I took a $9,500 taxable distribution from an inherited (non-spouse) IRA. I also made a $500 QCD from the account.

The 1099-R has:
Box 1 Gross Distribution $10,000
Box 2 Taxable amount $10,000
Box 2b "Taxable amount not determined" is checked
Box 7 Distribution code is 7
IRA/SEP/Simple has a checkmark

I am using HR Block Deluxe. How do I tell the software that only $9,500 is taxable on line 4b of form 1040? I tried telling the software that Box 2 on the 1099-R was $9,500 and Form 1040 still has $10,000 on line 4b.

Thanks, in advance,
--VtMaps

I have not this years yet. Last year, as part of the 1099R questionnaire, it asked if there were QCD's and how much. That info is used within HRB to determine how much taxable is reported on the 1040, with the notation of QCD to explain the difference between gross and taxable.

[vtMaps]

Put the 10,000 in both the total and taxable boxes; ignore the $500 charitable deduction for now. Just keep working through the interview. The program will ask you about a QCD after you finish with the 1099. It will ask if you did a full or partial QCD; say partial. Then you get to specify the $500 contribution. If you then go to forms view and look at the 1040 lines 4a/5a, you will see QCD.

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

--vtMaps

[galawdawg]

Were you at least 70½ years of age at the time you requested the QCD?

[prd1982]

Put the 10,000 in both the total and taxable boxes; ignore the $500 charitable deduction for now. Just keep working through the interview. The program will ask you about a QCD after you finish with the 1099. It will ask if you did a full or partial QCD; say partial. Then you get to specify the $500 contribution. If you then go to forms view and look at the 1040 lines 4a/5a, you will see QCD.

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

--vtMaps

I tried and didn’t work for me either. Everything I read online says you can do a QCD as long as you were 70.5 yrs old. I’m going to do some reading and will update if I find something. Sorry for giving you the wrong answer.

[galawdawg]

Here is a thread on the same issue from the 2020 H&R Block software, perhaps it will help (see the posts from HueyLD and livesoft): viewtopic.php?t=342473

[vtMaps]

Here is a thread on the same issue from the 2020 H&R Block software, perhaps it will help (see the posts from HueyLD and livesoft): viewtopic.php?t=342473

It is not the same issue. The thread you refer to was about a regular, not an inherited IRA. It seems that HR Block cannot handle a QCD from a non-spousal inherited IRA.

--vtMaps

[prd1982]

i tried what was mentioned in the thread referred to by galawdawg but it didn't work for me. Note that I also have my own IRA & QCD in the 1040 I was testing with.

I did find a doc that Fidelity wrote that said for inherited IRA, the QCD will be reported as a death distribution, which seems strange to me. Is there anything on your 1099-R that mentions a death benefit?

edit: My google search was: qcd from inherited ira secure act

[celia]

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

Then uncheck the “inherited” box.

[jebmke]

i tried what was mentioned in the thread referred to by galawdawg but it didn't work for me. Note that I also have my own IRA & QCD in the 1040 I was testing with.

I did find a doc that Fidelity wrote that said for inherited IRA, the QCD will be reported as a death distribution, which seems strange to me. Is there anything on your 1099-R that mentions a death benefit?

Inherited IRAs typically have Box 7 coded as "4" which is for a death benefit.

[jebmke]

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

Then uncheck the “inherited” box.

That's what I would try. Not even sure why they ask about that.

[prd1982]

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

Then uncheck the “inherited” box.

Great idea, since not on the 1040. But I always wonder what information the efile sends that is not on the actual tax forms, but is on the documents such as 1099s. I would suggest asking H&R Block if there is a solution to this issue.

[celia]

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

Then uncheck the “inherited” box.

That's what I would try. Not even sure why they ask about that.

Because the RMD calculations are different from your own IRA and one you inherited from a non-spouse. I think eventually, they will check if you took enough out for your RMD.

You tell them your birthdate and they know the 2021 ending balance from a 2021 Form 5498 they received last May (Box 5 is Fair Market Value at end of year).

[jebmke]

I tried that. I never get asked about the QCD. I did a little experimenting and created a new 1099-R from a regular, non inherited IRA and it did ask me about QCDs.

My conclusion is that this software cannot do QCDs from an Inherited IRA (or at least a non spousal inherited IRA).

Then uncheck the “inherited” box.

That's what I would try. Not even sure why they ask about that.

Because the RMD calculations are different from your own IRA and one you inherited from a non-spouse. I think eventually, they will check if you took enough out for your RMD.

But does any info get transmitted via the MEF system on this?

EDIT: I don't recall any entry in TaxSlayer Pro for Taxaide that flags a 1099-R as an inherited IRA.

[galawdawg]

Here is a thread on the same issue from the 2020 H&R Block software, perhaps it will help (see the posts from HueyLD and livesoft): viewtopic.php?t=342473

It is not the same issue. The thread you refer to was about a regular, not an inherited IRA. It seems that HR Block cannot handle a QCD from a non-spousal inherited IRA.

--vtMaps

Apologies for the error. Good luck.

[celia]

But does any info get transmitted via the MEF system on this?

EDIT: I don't recall any entry in TaxSlayer Pro for Taxaide that flags a 1099-R as an inherited IRA.

What is MEF?

[jebmke]

But does any info get transmitted via the MEF system on this?

EDIT: I don't recall any entry in TaxSlayer Pro for Taxaide that flags a 1099-R as an inherited IRA.

What is MEF?

The Modified E-filing system. It is the data that is transmitted by the tax software to the IRS (via the submitting company -- e.g. TS, HRB,TT etc.)

[prd1982]

Back to the doc from Fidelity about death benefit, i found another doc on the web that said for an inherited retirement account, 1099-R will typically report a "4" in box 7 (death). Perhaps that is only if you normally would have an early withdrawal penalty. I guess I'm going with:

* Contact H&R Block.
* If that doesn't work, turn off the inherited flag.

[celia]

But does any info get transmitted via the MEF system on this?

EDIT: I don't recall any entry in TaxSlayer Pro for Taxaide that flags a 1099-R as an inherited IRA.

What is MEF?

The Modified E-filing system. It is the data that is transmitted by the tax software to the IRS (via the submitting company -- e.g. TS, HRB,TT etc.)

It would probably be in there. But the tax return and taxes owed would be the same. It is HRB’s problem to fix this bug, not the taxpayer’s.

[vtMaps]

Inherited IRAs typically have Box 7 coded as "4" which is for a death benefit.

Back to the doc from Fidelity about death benefit, i found another doc on the web that said for an inherited retirement account, 1099-R will typically report a "4" in box 7 (death).

My error. The 1040-R is coded 4 in box 7, and that's what I entered in the HR Block software. I will edit my original post. -- vtMaps

[jebmke]

But does any info get transmitted via the MEF system on this?

EDIT: I don't recall any entry in TaxSlayer Pro for Taxaide that flags a 1099-R as an inherited IRA.

What is MEF?

The Modified E-filing system. It is the data that is transmitted by the tax software to the IRS (via the submitting company -- e.g. TS, HRB,TT etc.)

It would probably be in there. But the tax return and taxes owed would be the same. It is HRB’s problem to fix this bug, not the taxpayer’s.

I checked TaxSlayer Pro. There is no question on whether an IRA is inherited or not. This question in HRB may simply be handholding by HRB and have nothing to do with what gets transmitted to the IRS.

[celia]

I checked TaxSlayer Pro. There is no question on whether an IRA is inherited or not. This question in HRB may simply be handholding by HRB and have nothing to do with what gets transmitted to the IRS.

I haven’t looked at the file formats lately that the custodians must use in their reporting to the IRS. (They even have to report on IRAs that had no activity in the year, such as “forgotten” or dormant accounts.) I’m pretty sure there was a flag to indicate “inherited from non-spouse”. But even if it is in there, it appears a lot of the fields may not [yet] be required.

Anyway, I think we are getting away from the point of this thread. Back to the OP’s tax return . . .

[jebmke]

I checked TaxSlayer Pro. There is no question on whether an IRA is inherited or not. This question in HRB may simply be handholding by HRB and have nothing to do with what gets transmitted to the IRS.

I haven’t looked at the file formats lately that the custodians must use in their reporting to the IRS. (They even have to report on IRAs that had no activity in the year, such as “forgotten” or dormant accounts.) I’m pretty sure there was a flag to indicate “inherited from non-spouse”. But even if it is in there, it appears a lot of the fields may not [yet] be required.

Anyway, I think we are getting away from the point of this thread. Back to the OP’s tax return . . .

I'd uncheck inherited and move along. If I were preparing a hand-prepared 1040 there would be nothing but the correct numbers and "QCD" written on the form.

I predict the return will be accepted and OP will never hear another word about it. I wouldn't waste a moment with HRB trying to figure out what it doesn't work with Inherited checked.

[vtMaps]

I'd uncheck inherited and move along. If I were preparing a hand-prepared 1040 there would be nothing but the correct numbers and "QCD" written on the form.

That seems to work.

I predict the return will be accepted and OP will never hear another word about it.

I will let you know

I wouldn't waste a moment with HRB trying to figure out what it doesn't work with Inherited checked.

That is well understood. This forum provides better advice, and quicker, than HR Block.

--vtMaps

[medwick]

I reached the same conclusion as vtMaps and jebmke, before I saw this thread: the interview doesn't ask the QCD question when it believes you have an inherited IRA. So you enter 07 in box 7 on the 1099-R form, instead of 04, and answer No to the inherited IRA question. I too don't think the IRS will care as long as the 1040 entry is correct. I did get somebody on the phone yesterday fairly easily at HRB and reported the problem.

[jds13]

Two methods for the 1099-R Worksheet compute the same (correct) tax liability, but neither enters "QCD" next to 1040 line 4b as required by the IRS:

1. Uncheck "B1 'Check here if you inherited this IRA'", enter the QCD amount on F2.
2. Check "B1 'Check here if you inherited this IRA'", enter the taxable amount (distribution less QCD) on line B(3)(b) "Enter the taxable amount... and do not complete sections C-I."

Because neither method puts "QCD" on the 1040 next to 4b and both compute the same correct tax liability, I think it doesn't matter what you do. I'll probably use method 2, where the only problem is the missing "QCD" legend. Method 1 falsely states the IRA is not inherited, and asserts an inconsistent 'Death" code. But I'll wait for the March 17 update hoping that fixes this...

HRB should absolutely support QCDs from inherited IRAs.

[vtMaps]

Two methods for the 1099-R Worksheet compute the same (correct) tax liability, but neither enters "QCD" next to 1040 line 4b as required by the IRS:

1. Uncheck "B1 'Check here if you inherited this IRA'", enter the QCD amount on F2.
2. Check "B1 'Check here if you inherited this IRA'", enter the taxable amount (distribution less QCD) on line B(3)(b) "Enter the taxable amount... and do not complete sections C-I."

Because neither method puts "QCD" on the 1040 next to 4b and both compute the same correct tax liability, I think it doesn't matter what you do. I'll probably use method 2, where the only problem is the missing "QCD" legend. Method 1 falsely states the IRA is not inherited, and asserts an inconsistent 'Death" code. But I'll wait for the March 17 update hoping that fixes this...

HRB should absolutely support QCDs from inherited IRAs.

HRB does support QCDs from inherited IRAs, and it prints "QCD" next to line 4b as required.

Here's what to do:
•Enter the code 4 as shown on your 1099-R into HRB.
•Later, it will ask you if the IRA is inherited. Answer "NO".
•Still later it will ask you about QCDs.

If you do this, it will correctly print out your tax return. When you answer "NO", it has no effect on your tax return, it only affects the next question that HRB asks.

--vtMaps

[jebmke]

^^ Right, there is no need for the preparer to enter "QCD" anywhere. The software will insert that when you follow the steps you outline.

[jds13]

I (now) see "QCD" under line 5a, but nowhere on line 4... Right?

EDIT (and summary): In the program's "Form 1040 and Schedules 1-3", there are two output-only (greyed) boxes under line 5. When the program accepts a value in the 1099-R Worksheet QCD section, "QCD" appears in the first greyed box. It also appears in the print format 1040 to the right of, and slightly above, the "IRA distributions" legend for line 4a.

The program will accept an entry in the 1099-R QCD section only if "Check here if you inherited this IRA" is not checked. This should not trigger providing any incorrect information for the IRS...

There is no need to change any "Dist Code" (1099-R Worksheet box 7). Reporting this incorrectly could create a matching problem.

[vtMaps]

I (now) see "QCD" under line 5a, but nowhere on line 4... Right?

If the QCD is from an IRA, the "QCD" is printed in the upper part of line 4a. I think Line 5a would be for a QCD from a pension or annuity.

--vtMaps

[jebmke]

I (now) see "QCD" under line 5a, but nowhere on line 4... Right?

If the QCD is from an IRA, the "QCD" is printed in the upper part of line 4a. I think Line 5a would be for a QCD from a pension or annuity.

--vtMaps

there is no such thing as a QCD from a pension or annuity