Q&A of the Week November 23, 2022

Question

I would like to make a qualified charitable distribution so that I can reduce my tax income while supporting a charitable organization. What do I need to know?

Answer

If you are the trustee of an IRA, you can make a qualified charitable distribution (QCD) to an organization that is eligible to receive tax-deductible donations. You do not have to worry about meeting the standard deduction or itemizing deductions. Here are a few more things to know:

• You must be at least 70 1/2 years old when you make the QCD.

• QCDs count toward the required minimum distribution (RMD.)

• You must receive an acknowledgment for your donation.

• In order to claim the donation as a tax deduction, the QCD must be declared as income.

• The maximum annual exclusion for QCDs is $100,000.

• If you are married filing jointly, each spouse can have a QCD and exclude up to $100,000.

• QCDs are reported on Form 1040 of the tax return. The amount of the charitable donation goes on the line for IRA distributions. If the full amount was a QCD, for the taxable amount, enter "zero QCD."

It is always advantageous to consult with a tax professional!