IRS Confirms QCD Code Y Optional in 2026

Via their instructions for Form 1099-R and Form 5498, the IRS has confirmed that Code Y, used to report qualified charitable distributions, will remain optional for the 2026 tax year. Code Y was introduced in 2025 to give taxpayers a method for reporting QCDs to the IRS (and, thus, avoiding taxable distribution treatment upon failure to report QCDs). In 2026, taxpayers are permitted to direct up to $111,000 in IRA funds to a qualified charity of their choice. The amount of the QCD is not taxable and serves to reduce the taxpayer's required minimum distributions (RMDs). IRA custodians have not been required to report QCDs. That reporting obligation falls to taxpayers. Reporting via Code Y was optional for 2025 and remains optional for 2026. For more information on the rules governing QCDs, visit Tax Facts Online. Read More: Link to Q3997.