IRA Qualified Charitable Distributions

IRA Qualified Charitable Distributions

If you are at least 70 ½ and taking required minimum distributions (RMD) from an IRA and make charitable contributions, you should know about IRA Qualified Charitable Distributions (QCD).

Due to the tax law changes under the Tax Cuts and Jobs Act passed last year, many older Americans who itemized in prior years will no longer do so.  That means they will lose the benefit of their charitable contributions on their tax returns.

Qualified Charitable Distributions allow you to direct part of your annual RMD from the IRA trustee directly to a charity recognized by the IRS.  This part of your distributions counts toward your minimum required distribution, but is not included in income.

 

The reduction of your adjusted gross income by the amount of any QCD carries to other areas of your return.  The lower AGI may reduce the impact of taxable Social Security benefits, lower Medicare Part B and prescription drug premiums, and lower threshold for deductible medical expenses if you do itemize. 

Honorine M. Campisi, CPA