If you're 70½ or older and you're staring down a required minimum distribution this year, there's a move that can shrink your taxable income without touching your standard deduction.
It's called a qualified charitable distribution, and it lets you send money straight from an IRA to a charity.
You take up to $105,000 per person in 2024 directly from your IRA to a qualified charity.
That amount counts toward your RMD if you have one, and it never lands on your tax return as income.
You don't itemize, you don't claim a deduction, and you don't add a line to Schedule A.
Here's why that matters more than it sounds.
Most retirees now take the standard deduction, so writing a check to charity often does nothing for their taxes.
The money leaves your IRA, goes to the charity, and the IRS never counts it as income in the first place.
The catch is the transfer has to go directly from the IRA custodian to the charity.
If you withdraw the cash yourself and then donate it, the IRS treats it as a taxable distribution.
Ask your broker or fund company for their QCD form and make sure the check is payable to the charity, not to you.
You must be at least 70½ on the day of the transfer, not just turning 70 that year.
And the age for starting RMDs is now 73 for most people under the SECURE 2.0 rules, so a QCD can be a useful tool even before your first RMD is due.
There's also a one-time option worth knowing about.
Beginning in 2023, you can direct a one-time QCD of up to $53,000 to a charitable gift annuity, a charitable remainder unitrust, or a charitable remainder annuity trust.
These split-interest entities pay you income for life and then send what's left to charity.
It's a narrow window, and the rules are strict, so this is a conversation to have with a tax professional rather than a DIY project.
You'll want a written acknowledgment from the charity and a receipt or statement from your IRA custodian showing the transfer.
The IRS doesn't require you to file a special form for a QCD, but you do need documentation if questions come up.
One more thing retirees often miss: the $105,000 limit is per person, not per household.
A married couple with separate IRAs could each direct that amount.
But if you file jointly and only one spouse has an IRA, you can't double up on a single account.
The takeaway is that a QCD can lower your adjusted gross income, which can also reduce the taxable portion of your Social Security and your Medicare income-related premium surcharges.
For retirees who give to charity anyway, it's often the cheapest dollar they'll ever move.
This isn't a strategy for everyone, and it won't erase a big tax bill.
Final Thoughts
But if you're charitably inclined and you've already started taking RMDs, running the numbers with your advisor before year-end is a low-effort way to keep more of what you've saved.