Is A Qualified Charitable Distribution from Your IRA Suitable for You?
Qualified Charitable Distributions (QCDs) are a tax-savvy way to satisfy your charitable intentions. QCDs generally reduce taxable income without creating a deduction for a charitable contribution.
A QCD is a direct payment of funds from your Individual Retirement Account that you direct the custodian to disburse to the 501(c)(3) charity you name. The rules are complex, so you must consult a professional advisor to determine whether your IRA and charity qualify for QCDs. These are some of the more common requirements:
- IRAs eligible for QCDs include Traditional, Rollover, Inherited, SEP (inactive plans only), and SIMPLE (inactive plans only).
- Eligibility is based on being 70½ or older.
- QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
- To qualify for a QCD, the maximum annual amount is $100,000.00 (Indexed starting in 2024). This applies to the sum of QCDs made to one or more charities in a calendar year. (If you file taxes jointly, your spouse can also make a QCD from their own IRA within the same tax year for up to $100,000).
- For a QCD to count towards your current year's RMD, the funds be disbursed from the IRA by the RMD deadline, generally December 31. In this manner, the QCD reduces some portion of the RMD.
- Contributing to an IRA may reduce the deductible portion of the QCD. (The aggregate amount of deductible IRA contributions made to an IRA after the owner turns 70 1/2 will reduce the QCD amount not included in your gross income.)
- Any amounts donated that are more than the RMD cannot be carried forward to satisfy a future year’s RMDs.
- Funds distributed directly to you, the IRA owner, which you then give to charity, do not qualify as a QCD.
- IRA Custodians generally do not report QCDs at year-end on Form 1099-R. Thus, the IRA owner (the taxpayer) must ensure the QCD is presented on their tax return and obtain a tax acknowledgment letter from the charity to substantiate their contribution.
You should contact the IRA custodian to get the paperwork you need. You should also confirm that the IRA custodian has the Council's correct mailing address and the EIN Number for The New York State Council of Trout Unlimited which is 23-7355317.
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