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https://www.irs.gov/pub/irs-dft/i1099r–dft.pdf
Thanks to HD for fixing the problem in the link.
On April 15, 2025 the IRS issued draft instructions for the 2025 version of form 1099-R with a new box 7 code of “Y” to indicate the distribution is a qualified charitable distribution (QCD).
A good addition in my opinion.
Update 8/22/2026-
Denise Appleby at Morningstar had a 8/21/2026 article titled “The New QCD (Qualified Charitable Contribution) Reporting Rule Raises a Big Question for IRA Owners”. I recommend reading her article if you plan to make a QCD from your traditional IRA in 2026 or later years.
The key statement in the Morningstar article for me is “The unresolved question is whether a check signed by the IRA owner but drawn directly on the IRA and honored by the IRA custodian satisfies the statutory requirement that the distribution be made directly by the trustee.”
My broker, Vanguard, permanently discontinued check-writing services for all IRA accounts on September 24, 2025 thus the Morningstar unresolved question of what will they do is solved for me should I make a QCD.
My expectation is if you are able to write a QCD check to a charity from your traditional IRA and your IRA custodian does nor code your 1099-R with a “Y” then it seems likely to me that you are inviting eventual correspondence from the IRS and a administrative headache on this issue.
This simple article is one of my favorites as it had a reply from Jonathan one year ago where he both fixed a mistake I made on an embedded link and helped me understand how to not make the same mistake again.
The article at Morningstar explains the current status of QCD donations made by IRA account check-writing.
It could not be timelier for us since we are making our QCD donations for 2026 this very week. We write checks drawn on my IRA account. The only difference this year is that the QCDs will also count toward my RMD since this is also my first RMD year. We enabled check-writing on this account specifically to do QCDs, and the IRA checks are only used for for QCDs. Distributions for my RMD or other purposes are handed by direct IRA transfers to our brokerage account.
We make sure that all the requirements for a QCD donation are met. Our QCD spreadsheet includes the tax ID for every organization, which we have verified to be a 501c3. And certain non-501c3 governmental/educational institutions (such as state universities) also qualify.
As the donation receipts are received we verify that they also meet the QCD requirements.
Everything seemed fine, until code Y came along. The Morningstar article describes better than I can the various issues code Y triggers.
Our plan is to ignore code Y unless there is additional clarification. As we did last year we will document everything and hand our tax preparer our QCD files and let them handle it.
It is disappointing that more than a year after code Y was announced that “tax experts” are not able to provide clear and objective guidance but can only offer opinions.
Here is a link to the 2026 draft 1099-R instructions dated Jun 17, 2026 wherein the IRS writes, on a preliminary basis, the following –
…unexpected issues occasionally arise, or legislation is passed—in this case, we will post a new draft of the form to alert users that changes were made to the previously posted draft…
Code Y for box 7a on Form 1099-R. We added code
“Y” to the list of codes for box 7a to identify a qualified
charitable distribution (QCD). See Qualified charitable
distributions (QCDs), later.
For tax year 2026, the use of code Y to report a QCD
is optional. If you are completing and filing a 2026 Form
1099-R, you may choose, but are not required, to enter
code Y in box 7a.
It is difficult to provide timely, clear and objective guidance when the agency who interprets the laws passed by congress and writes the detailed regulations have not finalized their rules for the tax year we are more than halfway through. My intent in this updated post was to encourage using a direct from IRA custodian to charity method for those who are making qualified distributions to avoid potential tax compliance headache for you and your tax preparer. I do not have any idea if your broker will choose to use code “Y” regardless of the method of how the QCD is distributed.
Thank you, William, for this update. I value your recommendations and have saved the article to my tax file. Being just two years away from my first QCD (at age 70.5, from an inherited IRA), I have begun planning for them. My hope is that QCDs can eventually be accomplished with a few digital clicks, as are grants now from donor advised funds.
So glad to see this. My little side hustle j.o.b. includes a few conversations every year helping IRA age RMD folks distinguish between the QCD and the regular charitable contributions made in part from RMDs. They’re shocked to find out it’s not what they thought it was.
I agree that adding the QCD code is a good thing.The other issue I have run into almost every tax year is when our client provides us with a contemporaneous written acknowledgment (CWA) that fails to meet one or more of the IRS required acknowledgement factors. The most common CWA deficiency I see is usually when a small charitable organization or church does not include “A Statement Regarding Whether or not Any Goods or Services were Provided in Exchange for the Contribution“. If a proper CWA is not received by the earlier of the due date or when the return is filed the taxpayer cannot cure the deficiency by later getting a proper acknowledgement. For those making large QCD’s getting a timely CWA is a compliance must do in my thinking.
Bill, thanks for the alert.
We’re planning to do our first QCDs this year, so this is welcome news in my book.
My expectation is if you take both a QCD and other distributions from the same IRA in 2025 that you will receive two 1099-R’s, one with code Y for QCD and one for normal distributions.
How would the IRA custodian know what the IRA distributions were for? We have IRA check-writing and could use these for any purpose but currently only use for QCDs. Our IRA custodian (Schwab) is out of the loop on this.
Great question. I did a quick look at the draft 2025 1099-R instructions from the IRS and I did not find any commentary for people with IRA qualified charitable distributions paid via IRA owner generated checks to the charity. This could create a real headache for you.
Given the draft 2025 instructions have been out only 11 days I doubt that Schwab or any other broker that grants check writing privileges for QCDs has addressed this issue to date.
Until this issue is addressed by both Schwab and the IRS I think the prudent course of action is to not use such checks to make QCDs. I think using IRA demand checks for QCDs in 2025 has the potential for unintended negative tax consequences.
Unfortunately I would not expect the issue you raise to be addressed quickly. I would hope the IRS would allow taxpayers to continue to self report QCDs in 2025 that do not have a “Y” coding on 1099-R. If the IRS does not continue to allow self reporting of QCDs I do not know if or when brokers will have a work-a-round procedure.
Sorry I can not offer more information at this time.
Thanks!
By the way, in the link to the IRS 1099r draft document the i1099r–dft.pdf file name was displayed using a single long dash instead of two short dashes, or it appeared this way on my browser screen.
The – – is how I copied & pasted the link but it is not how it it is being displayed. I have tried both replacing the entire link and editing. When I am in the edit mode the – – appears but the comment continues to be a single long dash. I do not know what I do not know on how to fix the issue. Same on this reply I have added a space to explain the issue. I will add a comment to the original post.
Can anyone help?
Bill: I fixed it for you. In future, try pasting the hyperlink into your Forum post, and then highlight it and click on the editing symbol that looks like a double helix. That should turn the hyperlink into a live link. I then like to specify that the linked page opens in a new window.
Will do. Thank you.
Thanks, Bill. We are not old enough yet for QCD, but this is good to know. I am surprised there wasn’t a box for this before. Chris
Reading your comment made me think of events in 2015 when I had bought the original book Get What’s Yours written by Kotlikoff, Moeller and Solman. They had written a guide about the benefits of using file and suspend in claiming social security. The popular book became a best seller and it was not long until the law was changed to kill most of those claiming strategies. A revised version of the book was later issued after the law changed. I hope that the same fate does not await users of QCDs.
My guess is that adding the new 1099-R code was driven more by Treasury wanting to interject a third party in reporting on qualified charitable distributions rather than to make claiming the QCD more transparent and less complex.
Bill, we are at the peak of the baby boom, so, of course they changed the file and suspend before we could take advantage. We were definitely going to do it. Hopefully QCD won’t go away either, we tithe and are planning to use it if still available. Chris
Great news. It’s about time!
LOL, only a tax nerd like me could be excited by such news as a new code in box 12.
Assume you meant box 7? Not much to get excited about box 12 or 14.
It’s a fun club to belong to and the celebration party every April 15 never fails to entertain.
Where’s my invitation?
Bill, thanks for this. It’s good to see this update. It occurred to me that in 7 years of AARP TaxAide I’m not sure I’ve seen a QCD. I guess that speaks to the type of clients served.
Your past articles about the average income of users of TaxAide where you volunteer your time and tax knowledge indicates to me a high likelihood of potential smaller tax savings benefit, if any benefit at all, from using QCDs to lower taxable income.
Lack of knowledge or lower income do you think?
I would guess lower income for most, but a lack of knowledge is quite reasonable if you have limited qualified assets. Most of the charitable contributions I see are very modest. I’ve also observed that many seniors have been conditioned to think that their charitable contributions no longer “count” due to the tax code changes in 2017. Many still bring in charitable contributions info, but state “I know this doesn’t count anymore”. Some of them might benefit from using a QCD for their donations, but we are cautioned against providing financial planning advice. We also generally don’t see IRA account balances, just 1099s. Sometimes you can make a good estimate of their value.
I would think both factors and I would add where they hold their IRA. The big brokers are great, some smaller banks where the IRA asset(s) are a CD may require a little more work.