Form 1099-R Reporting for IRA Charitable Distributions

November 20, 2006 – On Friday, November 17, the IRS issued a “caution” at its website noting that the 2006 Instructions for Forms 1099-R and 5498 have been updated to correct certain reporting instructions. (An article titled “IRS Issues Revised 2006 Form 1099-R, 5498 Instructions” was posted earlier at this Latest News website.) The IRS caution also discusses on how financial organizations should report qualified charitable distributions from IRAs.

The Pension Protection Act of 2006 allows for tax-free charitable distributions from Traditional and Roth IRAs for individuals age 70½ or older. Financial organizations are not responsible to determine if a charity qualifies for the tax-free distribution. The IRS caution indicates that IRA charitable distributions should be reported on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in the IRA holder’s name with a code 7, Normal distribution, in Box 7, Distribution code(s).

Also posted earlier at this Latest News website is an article titled “IRA Charitable Distributions Reported on Form 1040” discussing how taxpayers must report charitable distributions on Form 1040, U.S. Individual Income Tax Return.

The IRS caution may be accessed as follows.
http://www.irs.gov/formspubs/article/0,,id=109875,00.html