Reduce Your Taxes through Charitable Giving
Qualified Charitable Distributions (QCD) from an IRA to the Alliance may reduce your taxes.
Retirement-age individuals and couples may not want to take an RMD for various reasons; a QCD (also known as a charitable IRA rollover) can also satisfy all or part of your annual required minimum distribution. They may have other sufficient sources of income for certain years. Also, the withdrawal, which is subject to ordinary income tax, may push them into a higher tax bracket, which can have adverse impacts on Social Security payments and Medicare benefits.
Thankfully, charitably-minded individuals and couples age 70½ and older have a tax-smart strategy. The QCD allows a donor to instruct an IRA administrator to send up to $100,000 per year—all or part of the annual RMD—to one or more qualifying charities, excluding donor-advised funds. Couples who submit tax returns with married filing jointly status each qualify for annual QCDs of up to $100,000, for a potential total of $200,000. Donors can also direct a one-time, $50,000 QCD to a charitable remainder trust or charitable gift annuity as part of recently passed SECURE Act 2.0 legislation. And starting in 2024, annual QCD limits will be indexed for inflation. So with QCDs, more of your assets can be used to support your favorite charities.
The IRA assets go directly to charity, so donors don't report QCDs as taxable income and don't owe any taxes on the QCD, even if they do not itemize deductions. Some donors may also find that QCDs provide greater tax savings than cash donations for which charitable tax deductions are claimed. Talk to your plan administrator or tax advisor to learn how you can benefit and support the Alliance through your IRA distribution.