Making Qualified Charitable Distribution (QCD)
In 2022, the IRS declared that individuals who are 70-1/2 or older can make charitable donations of up to $100,000 from tax-deferred accounts like IRAs. These are exempt from taxation if they come from a qualified account and go to a 501(c)3 organization such as WDCTA. (** see below)
A QCD can have advantages:
- Counts towards satisfying your RMD without you or the recipient charity having to pay income taxes.
- Not included in your AGI, which is used ot calculate certain other taxes and benefits.
- Does not matter whether or not you itemize deductions on your return (those using the standard deduction would generally receive no benefit from a regular contribution.)
- The regular charitable contribution deduction is typically limited to no more than 50% of AGI. This limit does not apply to a QCD.
Important reminders:
- Right now only IRAs are eligible for QCDs. If you have money in a 401(k) or other non-IRA plan, the assets may be rolled to an IRA to be eligible.
- You cannot take active receipt of the charitable donation. You can mail the check to the charity, but the check must be made our directly to the charity or charities of your choice.
- Recent legislation has updated the age for RMDs and donors 73 years and older must take an RMD. These funds can be used toward a tax-savvy IRA gift.
**Talk to your financial advisor and tax advisor about making a QCD. For information about making a donation to WDCTA please contact the WDCTA President or use our FORM here.
QCD = Qualified Charitable Distribution
RMD = Required Minimum Distribution
AGI = Adjusted Gross Income
IRA = Individual Retirement Account