Qualified Charitable Distributions

Qualified Charitable Distributions

If you are planning on making charitable contributions it may be beneficial to use your IRA as the source of funds. If the charity qualifies and you have attained age 70 1/2, you may distribute up to $100,000 per year from your IRA to the charity and the distribution is not treated as taxable income. The increase in the standard deduction has decreased the number of people who itemize on their tax returns. This is a way to recapture that deduction.

per IRS 590-B

Qualified charitable distributions (QCDs). 

A QCD is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions. You must be at least age 70½ when the distribution was made. Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution. See Substantiation Requirements in Pub. 526.

The maximum annual exclusion for QCDs is $100,000. Any QCD in excess of the $100,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000. The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income.

For further information please contact us at 610.268.6805 or info@atlaswealthpartners.com.