19 Mar QCD’s A Smart Way to Lower Your Tax Bill and Support Charity
We’re in the middle of tax season, and for those over age 73, the tax bill on a required minimum distribution (RMD) from an IRA may be raising questions. One option to consider, especially if you don’t need all of that distribution, is a Qualified Charitable Distribution (QCD).
QCDs can be a powerful tool. For many Americans, IRAs represent one of their largest assets, and there are ways to manage the tax impact of withdrawals. Once you reach age 70½, you can direct a portion of your IRA distribution to a qualified charitable organization. That amount is not counted as taxable income, which can reduce your overall tax burden.
For individuals who already give regularly to charitable organizations, this can be a simple and efficient way to give.
At the Foundation, we’ve seen people use QCDs in combination with matching events. Because QCDs can be completed later in the calendar year, donors can plan ahead, make a pledge, and still have their gift count toward a matching opportunity when the time comes.
We’ve also seen that it helps to start planning early. Many financial institutions have deadlines near the end of the year for processing RMDs and QCDs, so this isn’t something to leave until the last minute.
A QCD can be one of the most effective ways to support the organizations that strengthen our communities. As always, if you’re interested in how a QCD might fit into your overall tax strategy, it’s a good idea to speak with a tax professional or financial advisor.