Due to the recent tax law changes (that increased the standard deductions) many taxpayers may not be itemizing their taxes as they had done in previous years. However, even if you are no longer itemizing your deductions you may still be able to lower your taxes and continue to benefit Volunteer Alexandria and your philanthropic giving by utilizing the Qualified Charitable Distribution (QCD).
A QCDs is a tax strategy available if you are at least 70½ years old and have traditional or inherited IRA. With a QCD, qualified individuals can distribute up to $100,000/year directly from an IRA to a 501(c)(3) nonprofit with no federal income tax consequences. Since the distribution goes straight to the charity, it is not considered taxable income to the donor.
How Does It Work?
Individuals that have a traditional or inherited IRA and have reached age 70 ½ are required to take a distribution from their IRA that is taxed as ordinary income. However, those individuals can elect to make a Qualified Charitable Distribution instead of a Required Minimum Distribution if they choose. When your Qualified Charitable Distribution goes directly to a qualified charity instead of into your bank account, the distribution is not included in your Adjusted Gross Income. Using this strategy can lower your income and may decrease the tax you pay on your Social Security income or Medicare premiums. It could also impact whether or how much you owe for the Medicare surtax.
For more information on whether a QCD is right for you, and how you can help Volunteer Alexandria’s mission while decreasing your own tax liability, please contact your financial planner and ask how you can make a Qualified Charitable Donation to Volunteer Alexandria.