If you're 70½ or older and you've been writing checks to charity from your checking account, you may be leaving money on the table.
There's a tax move called a qualified charitable distribution, or QCD, and it lets you send money straight from an IRA to a charity without it ever counting as taxable income.
Standard deductions jumped after the 2017 tax overhaul, which means millions of retirees now take the standard deduction instead of itemizing.
When you don't itemize, your charitable donations no longer lower your tax bill.
A QCD sidesteps that problem entirely, because the money never hits your taxable income in the first place.
Once you turn 70½, you can direct up to $105,000 per year (the 2024 limit, indexed for inflation) from a traditional IRA directly to a qualified charity.
The transfer counts toward your required minimum distribution, which now kicks in at age 73.
You don't report it as income, and you don't claim a deduction.
It just quietly reduces the amount the IRS sees.
The check has to go from your IRA custodian to the charity.
If the money lands in your bank account first, even for a day, it becomes a taxable withdrawal and the trick is dead.
Ask your brokerage for a QCD form or the specific distribution paperwork.
Retirees who don't itemize, those bumping up against income thresholds for Medicare premiums, and anyone trying to keep Social Security from being taxed.
Lowering your adjusted gross income can ripple through all of those calculations, sometimes saving far more than the donation itself.
One more wrinkle worth knowing: you can't send a QCD to a donor-advised fund or a private foundation.
It has to go to a qualifying public charity.
And you'll want a receipt from the charity plus a record from your custodian, since the IRS expects documentation.
The deadline is Dec. 31 for the year you want the credit, and custodians get swamped in December.
If you're planning a year-end gift, start the paperwork in November.
My take: this is one of the few tax breaks that rewards people for being generous rather than just wealthy.
If you're charitably inclined and over 70½, it's worth a 15-minute call to your IRA custodian to see whether it fits your situation.
Final Thoughts
Ask a tax professional about your specific numbers before you move anything.