If you receive income from charitable gift annuities reported on Form 1099-R, the amount reflected in Box 3, Capital gain (included in Box 2a) will report the capital gains that are already included in the taxable amount reported in Box 2a of the form.
The following instructions will ensure the capital gains amount is taxed at the lower rate it is eligible for. These instructions will also ensure the correct amount flows to Line 16b of federal Form 1040.
To enter the capital gains amount on Schedule D:
- From within your TaxAct® return (Online or Desktop) click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Retirement Plan Income to expand the category, then click IRA, 401(k), and pension plan distribution (Form 1099-R)
- Click Add to create a new copy of the form or click Review to review a form already created
- Click Quick Entry or Step-by-Step Guidance
- If you select Quick Entry to enter the information directly on the supporting form, be sure to scroll down to answer all applicable questions. Enter the amounts in boxes 1, 2a and 3. Select F from the (alpha) drop down list in box 7.
- If you select Step-by-Step Guidance, continue to the screen titled Retirement Plan Income - Distribution Amount. Enter the amounts in boxes 1, 2a and 3 and click Continue. Select F from the Alpha distribution code drop down list.
The amount entered in box 3 with code F will transfer to Schedule D, Line 8 as From 1099-R. This amount will also be reported on Form 1040, Line 13.
Note: If you enter a numeric and alpha code in box 7, the amount in box 3 will be included on Line 16a and will not receive the lower tax rate.