Simplistic Strategy for Seniors Gifting (QCD) to Charity!

QCD

Great gifting strategy for senior citizens

This is for those of you and your parents that are at least 70 1/2 years old.

You should know about something called a Qualified Charitable Distribution, also known as (QCD).

QCD, Is a wrinkle in the tax code. That allows people to take their IRA, Required Minimum Distribution (RMD), and give it directly to charity, without incurring income tax.

For many people the extra taxable income from their RMD, makes their social security more income taxable. (see SS link). For others it will mean higher Medicare premiums. Your premium is determined by your past income (see link to Medicare premiums).

Other key points:
  • RMD’s only apply to IRA’s and the account owners that are over age 70 1/2.
  • In order to make this happen. The distribution check needs to be paid to the qualifying charity, and not directly to you.
  • The limit is $100,000.
  • While the RMD is no longer taxable. Donors will not get the income tax deduction and the benefits.
  • Although remember that a Donor-Advised fund does not qualify for this.
  • Make sure to do it in the proper way and discuss this with your tax advisor.
This can be a terrific gifting and tax saving strategy for seniors.

Please share with anybody you know over 70 1/2. They might want to take advantage of this gifting strategy and tax benefit.

 

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