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Tell Your CPA What You Did with Your IRA Because Your 1099R Won't


In a previous article I mention how you can reduce your taxes by making charitable gifts directly from your IRA. However when your IRA custodian sends you your 1099R at tax time it only shows the gross amount of distributions from your IRA. Unless you tell your CPA/tax preparer that you made a direct charitable gift they will likely include the full amount of the IRA distribution as income and you will overpay your taxes!


We encourage CPA's to add two questions to their tax organizer which addresses the questions of direct gifting from your IRA to charity and Roth conversions. Again the 1099R only shows the gross distribution from the traditional IRA. You must communicate to your tax preparer that you did a Roth conversion or direct gifting before they prepare your taxes or you may have additional tax preparation costs if the return has to be amended. Or worse you may over pay your taxes and not even realize the mistake until it’s too late.


Your investment advisor should provide you with a summary of IRA distributions that you can share with your tax preparer and supplement the information included on the form 1099R. As we like to say it’s a lot easier to avoid a problem than it is to fix one.


If your current advisor is not discussing direct IRA charitable gifting and Roth conversions with you call me for a free review of your tax return and consultation. Capstone Wealth Advisor is a fee only wealth management firm that practices under the fiduciary standard of advice.

Ronald J. Rich, CFP®, President

Reduce Your Taxes

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