Making Qualified Charitable Distributions from Your IRA

An individual over age 70 ½ who makes a qualified charitable distribution (QCD) from her individual retirement account:
  1. Won’t report the distribution as taxable income, and
  2. Won’t be entitled to claim a charitable income tax deduction for the gift.
Legal Requirements for Making a Qualified Charitable Distribution:
  1. Donor must be at least age 70 ½.
  2. IRAs only.
  3. The charitable distribution must be made directly from the IRA to the charity.
  4. The recipient organization must be a public charity, a private operating foundation or another special type of private foundation (PF). The three ineligible charitable recipients are: non-operating (grantmaking) PFs, donor-advised funds (DAFs) and IRC Section 509(a)(3) supporting organizations.
  5. The payment would otherwise fully qualify for a full charitable income tax deduction. There can be no personal financial benefit to the donor that would reduce a charitable income tax deduction (for example, auction purchases, fundraising dinners, favorable seating at athletic events or any other type of quid pro quo transaction.)
  6. The favorable tax treatment only applies to the taxable portion of an IRA distribution.
  7. The maximum exclusion is $100,000 per year. For married individuals filing a joint return, the limit is $100,000 per individual IRA owner, for a maximum exclusion of $200,000 on a joint return.
  8. The donor must have a documentation from the charity that would qualify the gift for a full charitable income tax deduction under normal circumstances. The IRA account owner must receive a contemporary written acknowledgment (CWA) from the charity before filing his income tax return. The CWA should describe the amount of cash contributed and it is helpful if it also certifies that the donor didn’t receive any goods or services in exchange for the gift. The taxpayers should report the IRA exclusion on the front page of Form 1040, with a reference to a QCD.
Please contact us if you need help with your income tax or charitable planning.

Updated 9/19/2018