Question

accounting for a gift from a charity

Forum|Forum|3 years ago
March 13, 2023
1 reply
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I made a gift (QCD) from my IRA direct to a charity and received a small gift. How do I account for it in TurboTax?

IRA

Employee

Normally, you would subtract the value of the gift from the tax deduction you report. In other words, if you made a $1000 donation and received a gift worth $100, you should only report a donation of $900.

It looks like prior versions of Turbotax will ask, when you enter the 1099-R, did you transfer the money to charity, and the choices are All, Part, or None. You would select Part, and enter the amount of the distribution that counts as a deduction (the amount not covered by the value of the gift). That should leave the portion of the distribution representing the value of the gift as taxable income.

J

John4taxAuthor

It's awkward in that I instructed the Trustee to send $10,500 to a charity and then at year end my receipt told me I had received gifts worth $205 value. I answered the charity transfer question with "part" as I had additional donations to other charities and had transferred the undonated part of my RMD to my bank account. Should I just subtract the $205 from the total provided when asked how much of my RMD went to charity? Thanks!

O

Opus 17

Employee

@John4tax wrote:

It's awkward in that I instructed the Trustee to send $10,500 to a charity and then at year end my receipt told me I had received gifts worth $205 value. I answered the charity transfer question with "part" as I had additional donations to other charities and had transferred the undonated part of my RMD to my bank account. Should I just subtract the $205 from the total provided when asked how much of my RMD went to charity? Thanks!

Correct, the $205 is not considered part of your donation to the charity since it represents the value of the gift you received in return.

Alternatively, you could refuse the gift, and call the entire QCD as a gift to charity. This of course, depends on what the gift was and whether the charity will accept a return. And I'm not entirely sure it would be acceptable to receive the gift in 2022 and send it back in 2023 to be able to take the full value of the donation, I suppose it depends on what the gift was and whether it has the same value today as when given. (Is it unopened, unused, etc.). At least, now that you know this charity does this sort of thing, you could make arrangements that they not send you the gift after you make next year's QCD.