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Financial Planning / Tax Strategies
|Subject: Re: Coverdell documentation||Date: 12/6/2012 1:23 AM|
|Author: TMFPMarti||Number: 117076 of 124815|
Box 7 has the code 7
Well, here's another example of when I think I remember something only to finally realize I have my wires crossed. My apologies. I thought there was a special 1099-R code for QCD's. There isn't, so the 1099-R is absolutely correct.
A note about that "taxable amount not determined." I mentioned earlier that 1099-R's for IRA distributions should always have that box checked. Since one can have IRAs with multiple custodians no single custodian can be 100% sure what the taxable amount of a specific distribution is. In the case in point, QCD's, let's assume a taxpayer did $50,000 QCD's from 3 different accounts with 3 different custodians. To each custodian it looks like a taxable amount of zero, but when you lump them on the return there's a problem since this treatment was available only up to $100,000.
Notifying the IRS that a distribution was a QCD was done on line 15 of the 1040, so it was clearly an error in preparation for whatever reasons. Back to the original side effect of the fallout from inflated AGI, amending the return might help.
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