If you are an IRA owner age 70½ or over, you may be eligible to make a qualified charitable distribution (QCD) from your IRA. A QCD is a tax-free distribution from your IRA that is made directly to a qualified charity, like Eirka’s Lighthouse
There are several benefits to making a qualified charitable distribution. First, the distribution is not taxable, so you do not have to pay income tax on the amount that you give to charity. Second, QCDs can count towards your required minimum distribution (RMD) for the year. This means that if you make a QCD, you may be able to reduce or eliminate the amount of taxable income that you have to report on your tax return.
To make a QCD, you must first contact your IRA trustee. They will be able to help you set up the distribution and ensure that it is made correctly. You can make a QCD electronically, by check, or by having the trustee transfer the funds directly to the charity.
The maximum amount you can distribute in a year is $100,000. If you are married and both you and your spouse are age 70½ or over, you can each make a QCD of up to $100,000 for a total of $200,000.
If you are considering making a qualified charitable distribution, there are a few things that you should keep in mind:
- You must be age 70½ or over to qualify.
- The distribution must be made directly from your IRA to a qualified charity.
- You cannot deduct the amount of the distribution on your tax return.
QCDs can be a great way to give to charity and reduce your taxable income at the same time. If you are eligible, you should consider making a QCD this year.
Here are some additional details about qualified charitable distributions:
- QCDs must be made from traditional IRAs. They cannot be made from Roth IRAs or SEP IRAs.
- QCDs must be made to a qualified charity. A qualified charity is any organization that is recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code.
- QCDs must be made in cash. You cannot make a QCD by donating appreciated property to charity.
- QCDs must be made by the end of the year. If you make a QCD in December, it will count towards your RMD for the following year.
If you are considering making a QCD, you should talk to your tax advisor to see if it is the right option for you.
By making a qualified charitable donation from your IRA, you can make an impact in addressing the youth mental health crisis. Erika’s Lighthouse will put your gift to immediate use to get resources to schools to help them increase protective factors for youth mental health. We help them increase school connectedness, increase mental health literacy, and engage families to be true partners.
Your gift will help make sure that EVERY student, in EVERY school has access to high-quality mental health education. Mental health education is suicide prevention, and you can make a true difference in the lives of students today.
