If you’re an IRA owner aged 70½ or older, there’s great news—you can donate up to $105,000 tax-free to qualified charities in 2024. That’s an increase from the previous limit of $100,000, offering more opportunities to support the causes you care about while reducing your taxable income.
How Do Qualified Charitable Distributions (QCDs) Work?
A QCD is a direct transfer of funds from your IRA to a qualified charity. Unlike regular IRA withdrawals, QCDs are excluded from your taxable income, making them a powerful tool for charitable giving.
For individuals aged 73 or older, QCDs can also count toward your Required Minimum Distribution (RMD) for the year, helping you meet RMD obligations while giving back.
Key Points to Know:
Donation Limits:
Individual IRA owners can donate up to $105,000 in 2024.
Married couples, if both qualify and have separate IRAs, can give up to $210,000 combined.
No Itemizing Required: You don’t need to itemize deductions to benefit from the tax-free treatment of QCDs.
Planning Ahead
The QCD limit is now subject to annual inflation adjustments, meaning it will rise to $108,000 in 2025.
Reporting and Documentation
To properly report a QCD:
Form 1099-R: Your IRA trustee will issue this form in early 2025, documenting the distribution.
Form 1040: Report the full IRA distribution on Line 4a and enter “0” on Line 4b if it’s fully a QCD. Be sure to mark it as such.
Acknowledgement from the Charity: Obtain written confirmation from the charity that includes the donation date, amount, and a statement confirming no goods or services were received in return.
For more detailed guidance, refer to IRS Publication 526 (Charitable Contributions) and Publication 590-B (Distributions from IRAs).
If you’re considering a QCD, reach out to your IRA trustee soon to ensure the transaction is completed before year-end, and take advantage of this tax-saving opportunity while supporting the causes that matter most.
