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How to Make a Tax-Free Donation from Your IRA


Even if you do not itemize your taxes, if you are 70 1/2 years old or older you may in effect get a deduction for your charitable donations. With the standard deduction in 2024 at $14,600 for individuals and $29,200 for married couples filing jointly, most people not paying a mortgage cannot take advantage of the income tax deduction available for donations to charities.

(Even if they are so generous that their donations exceed these amounts, they can lose out on a portion of their otherwise-available deduction. For instance, a married couple who gives away $40,000 to charities in 2024 would only be able to deduct the excess of $29,200 on their taxes.)

Taxpayers must begin taking the required minimum distributions (RMDs) from their IRAs and paying taxes on the amount they withdraw beginning with the year in which they reach age 72. (One exception is that taxpayers who are still employed can delay taking their RMDs from their 401(k) plan with that employer.)

Qualified Charitable Distributions

The way to satisfy the RMD rules and to receive a deduction for making charitable donations is to make them from your IRA. These are known as qualified charitable distributions (QCDs) and you can use them to contribute up to $105,000 of your IRAs to qualifying charities. Married couples can together give up to $210,000 a year. (Technically, these are not charitable deductions. Instead, you are satisfying your RMD by making the charitable contribution, rather than withdrawing the funds and paying taxes on them.)

While you have to begin taking your RMDs during the tax year in which you turn 72, you can begin making QCDs at age 70 1/2, if you so choose.

The Mechanics

In terms of the mechanics of making QCDs, you will need to work with the custodian of your IRA or 401(k) plan. Make sure that the check is payable directly to the charity. If it’s payable to you and then you sign it over to the charity or deposit it and write a new check to the charity, the distribution will not qualify as a QCD. You would still be able to take the charitable deduction, but only if you itemize.

If you would like the charity to know you made the contribution, ask the IRA custodian to include your name in the memo line of the check they send out. If they won’t do this, ask them to send the check (payable to the charity) to you, so you can send it in with a note.

And while the deadline for making your QCD is December 31st of each year, it can’t hurt to begin planning now so you’re not in a rush at the end of the year. If the check is not deposited and does not clear by the end of the year, it will not satisfy your RMD for that year.

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