If you recall, I wrote about donor-advised funds back in March. Rounding out the topic of charitable giving, I will be providing information in this blog about utilizing an IRA rollover to complete a qualified charitable distribution (QCD). With an IRA rollover directly to a qualified charity, there are a few rules to be aware of which are different than donor-advised funds. I will review some common rules and reasons why someone might consider a qualified charitable distribution when giving to charities. We here at XYTS would be remiss not to provide you with information about an opportunity to reduce your tax burden while giving.
The Tax Cuts and Jobs Act of 2017 (TCJA) nearly doubled the standard deduction, consequently making it more difficult to itemize deductions, including donations, and file form Schedule A. That’s a big reason I am writing this today—I am excited to introduce the qualified charitable distribution (QCD) as an opportunity to give more generously and reduce the tax burden.
A qualified charitable distribution is a slightly different vehicle for donating to your favorite charities. Let’s review some of the rules when considering this avenue to fulfill your generous soul!
So you know what a QCD is and who can take advantage of this donation strategy, but why? You’ll need some reasons why using a QCD is better than writing a check! And sure, I get it—it seems like a lot of hoops to jump through to contribute to your favorite charities. Let me outline a few reasons for you to think more seriously about utilizing QCDs.
Is a qualified charitable distribution in your philanthropic future? I sure hope this information has encouraged you to continue your good deeds and has provided you with a new way to think about being a giver. As a reminder, to take advantage of this on your 2021 tax return, you must ask your custodian to send a check by 12/31. If you have any remaining questions about the giving vehicle that is a QCD, or any other tax topics, don’t hesitate to find us here at XYTS. In the meantime, happy giving!
About the Author
Pam Hocevar is an Enrolled Agent and a Financial Paraplanner Qualified Professional with XY Tax Solutions (XYTS). Pam is the real deal when it comes to all things taxes, and she’s got the experience to back her up; she has over 15 years behind her, during 10 of which she ran the show as the owner of her own business. When she’s not working, you’ll find Pam hiking, camping, kayaking, enjoying a jam session on her baritone Ukulele, or attending a music festival.