Make a Qualified Charitable Distribution from your IRA
A Qualified Charitable Distribution (QCD) provides a way to help a favorite charity and reduce taxable income. Those over 70½ must take a Required Minimum Distribution (RMD) from retirement funds (i.e., an IRA, 401k, or 403b). These distributions are considered regular income and are taxed at the taxpayer’s regular rate. Donating all or part of the RMD to a charity satisfies the RMD on the amount donated while reducing taxable income, saving donors both federal and state tax.
The standard deduction reduces taxable income. The recent increase in the standard deduction makes itemization less useful for many taxpayers. For those over 65 years of age, the standard deduction for 2020 is $12,400 for single taxpayers and $24,800 for married taxpayers. For those over 70½ years of age, the Qualified Charitable Deduction from an IRA provides a way to lower the amount of taxable income beyond the standard deduction.
Key features of Qualified Charitable Distributions:
The owner of the IRA must be at least age 70½ at the time of the distribution.
The distribution must go directly to a qualified charity (not a donor-advised fund or private foundation).
The distribution must come from an IRA. Traditional IRAs are eligible, as well as SEP and SIMPLE IRAs to which the employer is no longer contributing. Distributions from a 401(k) or 403(b) are not eligible, but many 401(k) and 403(b) accounts can be rolled into IRAs.
There is no minimum QCD amount, but there is a $100k limit per individual taxpayer. Note that a married couple, both over age 70½, each qualify for the $100k limit so they may be able to use up to $200,000.
For some taxpayers, a QCD reduces the Adjusted Gross Income, perhaps keeping them from a higher tax rate, lowering amount of Social Security income that is taxable, and lowering the Medicare tax.
To make your Qualified Charitable Distribution to CCUA, contact your financial institution and provide them with the name and the address below. The check will come to us directly from your financial institution, so you should request that your name be printed in the check memo so that we can attribute the gift to you.
Columbia Center for Urban Agriculture
PO Box 1742
Columbia MO 65205
Important Considerations:
A QCD must go from the financial institution holding the IRA directly to the charity -- not to the individual and then to the charity.
This document is not intended as tax advice, please contact your tax advisor to understand all of the conditions and implications associated with QCDs.
The EIN, if required by the financial institution is 26-4486257
For More Information Contact: Billy Polansky 540-226-3806