Qualified Charitable Distributions (QCDs) are a unique tax strategy that allow individuals who are at least age 70½ and have Traditional and/or Inherited IRAs to distribute up to $100,000 per year directly from their IRA to a 501(c)(3) nonprofit with no federal income tax consequences.
QCDs are not included in your Adjusted Gross Income (AGI), so using this strategy can lower your income and may possibly decrease the tax you pay on your Social Security income. This may also have a positive effect on your taxes with regard to deductions, exemptions, and tax credits. Check with your tax advisor to determine how lowering your AGI may benefit you.
Although you cannot take a charitable deduction for a QCD, reducing your AGI may provide a better tax benefit. If you normally make donations to charities anyway, you may want to consider making those donations from your IRA.
Remember that the financial institution will need to make the check payable directly from your IRA to a qualifying charity to have this strategy work for you. Be sure the checks have cleared by the last working day in December in order for the distribution to count for the current tax year. A good rule of thumb may be to complete your charitable giving by the beginning of December.
Your QCD contribution will help assure the future of the Sacramento Choral Society and Orchestra.
