Reporting charitable distribution: What to put on tax return

Q. If I make a qualified charitable distribution to satisfy my required minimum distribution, how do I report it on my tax return? Do I need an acknowledgment for the IRS?

A. Your IRA custodian will send you a 1099-R form, but it won’t specifically identify the distribution as a QCD.

Instead, you need to be careful to report your QCD correctly on your tax return. There’s a line where you report your total IRA distributions for the year (on the 2018 federal tax return, that was line 4A). Then there’s an adjacent line (4B on last year’s return) where you report the taxable amount, less the nontaxable QCDs you made. On that same line, write in the letters QCD, which tells the IRS that you’re reducing the amount of your IRA distribution by the QCDs you made.

Taxpayers age 70 ½ and older can directly transfer up to $100,000 tax-free each year from a traditional IRA to one or more charities. This counts toward their required minimum distributions without being added to adjusted gross income.

When donating through a QCD, keep a record of your gifts so that at year-end you have a list of the payees and amounts should the IRS audit you. The charities that received your QCDs should also furnish a written acknowledgment of any donation of $250 or more when it’s made.

Q. My spouse and I are both age 64. My Social Security benefit is higher than my spouse’s, and I plan to claim at age 70 so my benefit can earn delayed retirement credits. If my spouse claims her own benefit at her full retirement age, will that impact her ability to take a spousal benefit on my earnings record in the future?

A. If your spouse claims her own benefit at her full retirement age, she can switch to a spousal benefit on your earnings record once you claim your benefit a few years later, assuming that spousal benefit is higher than her own benefit. She won’t be eligible for a spousal benefit until you claim your benefit, so taking her own benefit will bring income into the household while the higher benefit earns delayed credits.

By waiting to claim her own benefit at her full retirement age, she would receive 50% of your full retirement age benefit as her spousal benefit.