QCD And EIN

bobert456 | Jun 16, 2022 | 187 posts since 2022

The IRS has a lookup tool to help verify that the EIN or TAX PAYER ID is valid for a charitible contribution.

When or how does the EIN get communicated to the Custodian of the IRA to make the Distribution (QCD). How does the Custodian even report the 1099 to the IRA owner or the IRS without referencing the EIN. HOW does the EIN ever get used or reported?

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Answers

CuriousDave | Jun 16, 2022 | 233 posts since 2018

We, the taxpayers, not our IRA custodians, are responsible for determining whether or not the recipients of our charitable donations are qualifying charities under the tax rules and for determining whether or not the payments to those organizations by the custodians qualify as QCDs. However, we will still need to provide the custodian with the name and, maybe,** the mailing address of the charity** and to inform the custodian that we are making a QCD so that the custodian is not confused into thinking that the recipient is another custodian (and that we are rolling over the amount to a different IRA account). Therefore, there is no need to provide the charity’s EIN to the custodian. The Forms 1099-R that the custodians issue to us will show the payments as Normal Distributions (code 7) and when we report them on our personal tax returns it’s our responsibility to show the payments as gross distributions and then to exclude them from the “Taxable Amount” and to make a small notation QCD alongside the “Taxable Amount” so the IRS will know that the difference represents QCDs. For those of us who file our taxes with online providers there will be a place where we provide QCD info and the software will do all this work for us.
** The IRS does allow us to instruct the custodians to make the QCD checks payable to the charities but to mail them to us personally rather than directly to the charities, Then we can mail out those checks together with instructions to mail the receipts to us and not to the custodians.

Choice | Jun 17, 2022 | 937 posts since 2020

Dave, very good but could you expand on your footnote **. Where is that coming from, ie mailing to individual and mailing by individual to charity. Thanks

CuriousDave | Jun 17, 2022 | 233 posts since 2018

QCDs were originally legislated, along with many other changes relating to retirement plans, as part of the Pension Protections Act of 2006 (PPA-06). In response to the many questions that arose from the legislation, in 2007 the IRS issued guidance on its interpretation of the new legislation in its Notice 2007-7 (accessible at www.irs.gov/pub/irs-drop/n-07-07.pdf), which addressed in Q&A format its responses to many of these questions.
Question 41:
Q: is a check from an IRA made payable to a charitable organization described in Section 408(d)(8) and delivered by the IRA owner to the charitable organization a direct payment to such organization?
A: Yes. If a check from an IRA is made payable to a charitable organization described in Section 408(d)(8) and delivered by the IRA owner to the charitable organization, the payment to the charitable organization will be considered a direct payment by the IRA trustee to the charitable organization for purposes of Section 408(d)(8)(B)(1).
As stated in my comment, my reason for doing this is to ensure that the IRA custodian sends the receipt to me and not to the IRA custodian (referred to by IRS as “trustee”). It also obviates the need to provide the address of the charity to the custodian and the possibility of it being mid-addressed.

Choice | Jun 17, 2022 | 937 posts since 2020

Thanks, Dave and it ensures timely receipt by receiving organizations with no typos. I do it but had not seen any “authority “ for same. Just looked it up…again, thanks!

bobert456 | Jun 17, 2022 | 187 posts since 2022

my broker paperwork DOES NOT ask for the EIN for the distribution, only payee name. So I do worry about how the IRS will recognize (agree with me at tax time) that is a EIN 501c3. Does not uniquely identify them. NOR will the 1099 if the broker does not have it. No handshake anywhere on the key field EIN

alan1 | Jun 17, 2022 | 877 posts since 2015

bobert456 -- this is my understanding -- I welcome any corrections and additions (I may not be right).

The IRS will neither "agree with" you nor disagree with you "at tax time". You will submit your return at tax time and (generally) the IRS will accept the return.

If the IRS subsequently audits your return with respect to the distribution, it's up to you to show that you made a qualifying distribution (as you claimed).

I hope people who know more than I do about this matter will post corrections.

Choice | Jun 16, 2022 | 937 posts since 2020

When I have made QCDs I provided the name, address, taxid number, etc to the IRA trustee. The 1099 does not show to whom payment was made but merely a distribution to you. Thus I include the QCD notation etc on return with copies of letters receipts to show it was a QCD

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