Qualified Charitable Distributions - A Smart and Easy Tax Move before December 31st

If you are 70 ? and older, you have just a few weeks to take advantage of an easy way to make a big difference and get a tax break for 2024.

Love writing checks to charities? Get a checkbook from your IRA to write a Qualified Charitable Distribution instead. Most custodians like Schwab are happy to send these out free of charge and the checks are watermarked ‘IRA’ to prevent confusion with your regular checkbook.

To get this done by December 31st, you might want to call your custodian or advisor and just have them send the money versus waiting for the checks. Be sure you do this soon, as you will want securities to be sold and the money sent to the charity by December 31st, so this reflects on your 2024 1099R.

Qualified Charitable Distributions, or QCDs, have many great advantages such as

·?????? Offsetting taxable income from Required Minimum Distributions (RMDs)

·?????? Reducing your IRA balance without incurring taxes, which will help reduce future RMDs

·?????? Easy and no cost to do from your IRA

·?????? Tracks your donations on your regular statement

·?????? Eliminates administrative fees, such as a credit card processing fee to give to each charity

What is a QCD? QCDs allow individuals 70? and older to donate money directly from their IRAs to charities and owe no income tax on those withdrawals. Per the IRS, the 2024 limit is $105,000 ($108,000 for 2025). You can give to as many charities as you would like.?

These distributions allow for donors to reduce taxable income while still taking the standard deduction, which is the amount you get if you do not itemize deductions on your Schedule A.??

Remember, QCDs reduce your taxable AGI, lowering your tax bracket. This is turn can keep you out of the dangerous 3.8% surtax on net investment income, Medicare premiums and IRMAA charges. Pulling charitable distributions from your IRA instead of your taxable brokerage can also allow your heirs to eventually inherit more of your taxable assets (a step up in basis) instead of inheriting a taxable asset (IRA inheritances carry minimum distributions taxed as regular income). Strategic planning means your beneficiaries and your charities, not the government, benefit from your investments.