Giving From Your IRA: A Plain-English Guide to Qualified Charitable Distributions
If you are 70½ or older and give to charity, there is a way to give straight from your IRA. It is called a qualified charitable distribution, or QCD. For some people it fits neatly with the yearly required withdrawal. With the year ending, now is a good time to learn how it works. This article is general information, not tax advice.
What a QCD Is
The IRS describes a qualified charitable distribution as an otherwise taxable distribution from an IRA, paid directly from the IRA to a qualified charity, from an IRA owned by someone age 70½ or over. In plain words: the money goes from your IRA to the charity. It never passes through your hands.
The Main Rules
- Age: the IRA owner must be 70½ or older when the distribution is made.
- Type of account: the IRS says a QCD comes from an IRA, other than an ongoing SEP or SIMPLE IRA.
- Direct payment: the money must be paid directly from the IRA to a qualified charity. Taking the money out yourself and then donating it does not count as a QCD.
- Required withdrawals: the IRS says a QCD can satisfy all or part of your required minimum distribution (RMD) from your IRA.
How It Shows Up on Your Taxes
Your IRA company reports the distribution on Form 1099-R for the calendar year in which it was made. The IRS explains that on your Form 1040 you report the full amount on the IRA distributions line. If the whole amount was a QCD, you enter zero on the taxable amount line and write “QCD” next to it.
Tax forms and lines can change from year to year, so check the current instructions or ask a tax professional. Free help may also be available. Our article on tax breaks after 65 covers other senior tax topics.
Steps to Take if You Want to Try It
- Confirm that you are 70½ or older and that your account is an IRA that qualifies.
- Check that the charity is a qualified organization. Ask the charity, or use the IRS Tax Exempt Organization Search.
- Call your IRA company and ask how it handles charitable distributions. Ask what forms it needs and how long it takes.
- Ask whether the payment will be made by check to the charity or sent another way. Do not take the money out first.
- Keep any receipt or thank-you letter from the charity with your tax records.
- Start early. A transfer that is not finished by December 31 will not count for this year, so ask your IRA company about its deadlines.
Stay Safe With Year-End Giving
Giving season brings fake charities. Never pay a charity with gift cards, wire transfers or cryptocurrency, and never give your Social Security number or bank login to someone who contacts you. Look up the charity yourself before you give. Our article on charity scams has more.
Your IRA company and a tax professional can tell you how a QCD applies to your own situation. Rules vary and limits are adjusted from time to time, so check the current figures at irs.gov before you act.
More on Seniors Tips
- Required Minimum Distributions: What to Do Before December 31
- Tax Breaks After 65: The Extra Standard Deduction and the New $6,000 Senior Deduction
