pre-tax retirement

Reporting RMDs and QCDs the Right Way on Tax Forms

by

Nobody wants to be audited by the IRS. One of the best ways to avoid this is to report everything properly on your tax forms. In his latest column, Julian Block offers some important reminders and reporting requirements for retirees who utilize IRA withdrawals to make tax-deductible donations.

Apr 29th 2021
Share this content

In a previous column, I highlighted new rules that allow nonitemizers to take 2020 deductions of as much as $300 for contributions to charities. Something else that I discussed in more detail was tax breaks for retirees who use IRA withdrawals to make deductible donations.

To recap, long-standing rules require individuals who place money in traditional IRAs and other kinds of tax-deferred retirement plans to make annual withdrawals after they attain age 72. These yearly subtractions are known as RMDs, short for required minimum distributions.

On the plus side, the law allows seniors to use some of their RMDs to make to make deductible contributions. These donations are known as QCDs, short for qualified charitable distributions.

In response to the coronavirus, Congress approved and then-president Trump signed the CARES Act, short for the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act. The CARES Act allows seniors to skip RMDS for 2020. But seniors who opt not to receive RMDs still are able to make QCDs for 2020.

What follows are more reminders about RMDs and QCDs.

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:

View all AccountingWEB content
Comment on articles

Access content now

Already have an account?

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.