Since 2006 qualified IRA account owners have been allowed to make direct contributions of up to $100,000 from their IRA accounts to charities without having to include the distribution in their taxable income.

The IRS increased that limit to $105,000 for tax year 2024.  Therefore a couple, each with their own IRAs, may now contribute as much as $210,000 tax-free directly to the qualified charities of their choice.

Qualified Charitable Distributions (QCDs) are available for IRA owners aged 70 ½ or older.  That used to also be the age at which IRA owners were required to begin Required Minimum Distributions (RMDs).  While the SECURE Act increased the RMD starting age to 73, the QCD age remains 70 ½.   For those who are subject to the RMD requirements, the QCD may be used to fulfill a part of or all of their required minimum distribution.

Unlike other charitable donations, QCDs do not require donors to itemize their deductions on their tax returns. This is a beneficial option for those who take the Standard Deduction and a tax-efficient way to support charities.

For those tax-payers unaware of this QCD increase, they still have until the end of the year to add to this year’s QCD.

Taxpayers should not wait until the last minute to instruct their IRA advisors or custodians to implement any QCDs.  Missed deadlines are likely to equal missed opportunities.

Before implementing any tax strategy, it is always prudent to consult your tax advisor or Certified Financial Planner™.