By: Justin Linscott, CPA, CFP^®, CGMA, CITP- Principal

Qualified Charitable Distributions, otherwise known as QCDs, are cash donations that can be made by IRA owners and beneficiaries age 70 ½ and over to IRS-approved public charities. These donations must come directly out of an IRA account to qualify as a QCD. They are federal income, tax free, but cannot be treated as an itemized write-off on your Form 1040 tax form. However, the tax free element presents an immediate %100 deduction without the concern of restrictions that can simply slow itemized deductions down.

QCDs must come from you or your IRA trustee and go directly to a qualified public charity. Or, the IRA trustee can provide you with a check made out to the charity that you then must deliver. There can be no middle man action where the funds go into another account before being turned over to the charity.  Looking to donate to a private foundation? You may not do so through a QCD. $100,000 is the cap for annual QCD donations. Married couples with separate IRA accounts can both donate $100,000 respectfully.

No matter how much you donate, you must keep record of the contribution- this should be provided to you by the charity and the charity must not provide you with any token of appreciation for your generosity.

QCDs present income tax benefits as they are not considered a part of your Adjusted Gross Income which keeps many phase out rules at bay.  There are many more benefits to be had, but now is the time to act. If you are interested in learning more about tax-saving QCD exercises, we should get together now. That way, we can arrange for the proper IRA funds to go to the qualified charities of your choosing by year end.