If you are 73 or older and still writing checks to your favorite charity, there is a tax move that could shrink your tax bill without touching your bank account.
It is called a qualified charitable distribution, or QCD, and it lets you send money directly from an IRA to a qualified charity.
A QCD counts toward your required minimum distribution, but the money never shows up as taxable income on your return.
That matters if you do not itemize, because the standard deduction wipes out most people's ability to write off charitable gifts anyway.
You must be at least 70½ years old when the gift is made.
The money has to come straight from a traditional IRA or an inactive 401(k) transferred to an IRA.
You cannot withdraw it yourself first and then donate it, or the IRS treats it as ordinary income.
For 2024, the annual cap is $105,000 per person, and it is indexed for inflation in later years.
A married couple filing jointly can each use their own IRA, which doubles the ceiling.
The check must land with the charity by December 31 to count for that tax year.
Gifts to a private foundation, a donor-advised fund, or a supporting organization generally do not count.
You also cannot use a QCD to fund a charitable gift annuity or a remainder trust.
The charity must be a legitimate 501(c)(3), and you should get a receipt showing the gift came from your IRA.
People who take the standard deduction, donors who would rather not boost their adjusted gross income, and anyone whose Medicare premiums are tied to income thresholds.
Keeping that distribution out of your AGI can also protect you from the Social Security tax torpedo that hits retirees with extra income.
One catch to watch: the charity receives a check, and sometimes the custodian mails it to you first to forward.
Send it along promptly and keep the paperwork.
A paper trail is your only proof if the IRS asks questions.
There are a few moving parts, so it is worth a ten-minute call with your tax preparer or the custodian holding your IRA before you commit.
Rules change, thresholds shift, and your personal situation decides whether this beats a plain old check.
Our take: this is one of the rare tax breaks that rewards generosity instead of punishing it.
Final Thoughts
If you already give, routing the money through your IRA instead of your checking account is worth a look before the year closes.