People 70 ½ and older can transfer up to $100,000 yearly from Individual Retirement (savings) Accounts (“IRA) directly to charity. These payments are known as Qualified Charitable Distributions- (QCDs). The advantages to making a QCD include the following:

• If you are subject to Required Minimum Distribution (RMD) rules, the QCD counts toward your RMD
• With the increase in the standard deduction, far less people itemize deductions making their charitable donations are not deductible. Paying your charitable contributions directly from your IRA allows you to claw back that deduction and the amount donated will lower your taxable income by the amount of your QCD.
  • Thus, even if you don’t itemize your deductions (and take the standard), QCDs can lessen your tax burden.
    • This is because after including the full amount of IRA distribution reported on your Form 1099 from the plan fiduciary, the amount that qualifies as RCDs is subtracted in determining the taxable amount, thus lowering your gross income and thus adjusted gross income (AGI)
• Lower AGI may mean, for some, a lessening of the income tax paid on Social Security benefits
• As Medicare premiums are based on AGI, QCDs are not subject to the Medicare premium surcharge. Thus, for some a lower AGI could result in a reduction of monthly Medicare premiums withheld from the total SS benefits.