If you receive income from charitable gift annuities reported on Form 1099-R, the amount reflected in Box 3 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 4b of Federal Form 1040 U.S. Individual Income Tax Return.
To enter the capital gains amount on Schedule D Capital Gains and Losses:
- From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
- Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand, then click IRA, 401(k), and pension plan distributions (Form 1099-R).
- Click + Add Form 1099-R to create a new copy of the form or click Edit to review a form already created.
- Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
- On the screen titled Retirement Plan Income - Distribution Amount, enter the 1. Gross distribution, 2a. Taxable amount, and 3. Capital gains (included in box 2a) amounts, then click Continue.
- On the screen titled Retirement Plan Income - Box 7, select "F-Charitable gift annuity" from the 7. Distribution code drop-down, then click Continue.
The amount entered in Box 3 with code "F" will transfer to Schedule D, Line 8 as Form 1099-R. This amount will also be reported on Form 1040, Line 7.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.