global Tax Maximize Tax Free Giving Before Year End: Donate Up to $105,000 Through QCDs December 05, 2024 Attention Individual Retirement Account (IRA) owners …have you considered making a qualified charitable distribution? Doing so before December 31 can result in tax benefits. Let’s dive in. Interested in giving back while lowering your tax bill? Good news for you! In 2024, IRA owners aged 70½ and older can make up to $105,000 in tax-free charitable donations through Qualified Charitable Distributions (QCDs)—an increase from previous years. And if you're 73 or older, these gifts can also help you meet your Required Minimum Distribution (RMD), making this a win-win for your finances and your favorite causes. Let’s explore this tax saving strategy. What is a QCD? A Qualified Charitable Distribution (QCD) can help you lower your taxable income and benefit the charities of your choice, because it does not have to be included in your income. It is considered an “above the line deduction” meaning that it is a reduction to your gross income as opposed to a potentially limited itemized deduction. IRA distributions are taxable but if you send a QCD directly to a qualified charity, it remains tax free. How can you benefit from QCDs? To make a Qualified Charitable Distribution (QCD), you must meet the following criteria: You must be at least 70½ years old. The total amount of QCDs cannot exceed $105,000 per year (you can donate less, and contribute to multiple charities as long as the total is under $105,000). If you file jointly, your spouse can also make a QCD from their own IRA, up to $105,000, in the same tax year (so $210,000 total). You must direct your IRA trustee to send the donation directly to the charity—funds cannot be distributed to you first and then donated. The charity must be a qualified 501(c)(3) organization. While most charities qualify, private foundations and donor-advised funds (DAFs) are not eligible. Additional savings available for age 73+ Additionally, if you are 73 or older QCDs can count towards your Required Minimum Distribution (RMD) for the year. How do you go about making a QCD? To ensure your transaction clears before year end, contact your IRA trustee ASAP. How do you report QCDs? You report QCDs on your 2024 tax return. IRA trustees will send Form 1099-R in early 2025 to document your IRA distributions. When filing, enter the full amount of any IRA distribution on Line 4a of Form 1040 or 1040-SR. If it's a QCD, enter "0" on Line 4b and mark it as such. Be sure to get a written acknowledgment from the charity, confirming the donation date, amount, and that no goods or services were received.
