If you're 70½ or older and you write checks to charity, there's a good chance you're leaving money on the table — and it has nothing to do with how generous you are.
It's called a qualified charitable distribution, or QCD.
The idea is simple: instead of taking money out of your IRA, paying income tax on it, and then donating what's left, you send the money straight from your IRA to the charity.
The withdrawal never shows up as taxable income.
For retirees who don't itemize — which is most of them since the standard deduction got bigger — this is one of the few remaining ways a charitable gift actually lowers your tax bill.
When you donate cash from your checking account, you probably get no deduction at all.
When you donate from your IRA, the tax savings happen automatically.
You must be at least 70½ years old on the day of the gift.
The money has to move directly from your IRA to a qualified charity — a traditional IRA or an inactive SEP or SIMPLE IRA works.
You can give up to $105,000 per person in 2024, and married couples can each give that amount from their own accounts.
A check made payable to the charity and mailed from your IRA custodian counts, even if you hand-deliver it.
The part that catches people off guard is what a QCD does to required minimum distributions.
Once you hit 73, the IRS makes you pull money out of your IRA whether you need it or not, and that withdrawal is taxed.
A QCD can count toward your RMD for the year.
So retirees who were going to donate anyway can satisfy two obligations with one move.
You can't send a QCD to a private foundation or a donor-advised fund — those don't qualify.
You also won't get a charitable deduction for the same gift, but that's fine, because you already got the benefit by keeping the money out of your income.
And the gift has to be completed by December 31; there's no grace period into the new year.
Your IRA custodian will issue a Form 1099-R showing the distribution.
You need to report it as a QCD on your return so the IRS knows it wasn't a taxable withdrawal.
Miss that step and you could get a letter.
One more angle worth knowing: a QCD can count toward your RMD, but if you take your full RMD as cash first and then try to donate, you've already locked in the tax hit.
The order of operations genuinely matters.
For retirees with modest incomes, the appeal is obvious.
A $5,000 QCD is $5,000 that never touches your adjusted gross income.
That can protect Social Security from being taxed, keep Medicare premiums from climbing, and trim the taxable portion of your estate.
The takeaway is that generosity and tax planning don't have to be separate conversations.
If you're charitably inclined and sitting on a traditional IRA, ask your custodian whether they can process a QCD — most major brokerages have a form for it.
Final Thoughts
Just don't wait until late December, when processing lines get long and mistakes get expensive.