Maximize Your Charitable Impact AND Save on Taxes with This Strategy!
Have you ever heard of something that lets you help others and save on taxes at the same time? In this blog post, we'll uncover what Qualified Charitable Distributions (QCDs) are and how they can make a difference in your giving and financial planning.
What's a QCD?
A Qualified Charitable Distribution (QCD) is a way to give to charity directly from your Individual Retirement Account (IRA) while getting some tax benefits.
Instead of taking the money out and paying taxes, you can send it straight to a charity you care about. It's like sharing a slice of your retirement pie with causes that matter to you.
Benefits of QCDs
Required Minimum Distributions (RMDs): If you're at least 73 years old, you usually need to take out a certain amount from your IRA each year, known as your Required Minimum Distribution (RMD). With a QCD, you can use that RMD to make a charitable gift instead. So not only are you doing good, but you're also reducing your taxable income.
Tax Breaks: When you use a QCD to donate, the amount you donate doesn't count as taxable income. This means you don't have to pay taxes on that part of your IRA distribution. While simultaneously counting toward your RMD.
Impactful Giving: QCDs allow you to support causes you believe in directly from your retirement account. It's a great way to make your charitable giving more meaningful and impactful as the gifts are directed by you directly to the qualified charity of your choice.
Making the Most of QCDs
To make the most of QCDs, here are some steps to keep in mind:
Eligible Charities: Not all charities qualify for QCDs. Make sure the charity you want to donate to is eligible. Please note that you are unable to contributions to donor advised funds and private foundations.
Documentation: Keep records of your QCDs and the charities you support. You might need them when filing your taxes.
Limits: There's a yearly limit of $100,000 for QCDs per person. If you're married, you and your spouse can each do $100,000.
Please note: QCDs may not be for everyone. You must have an RMD, and it is only recommended to be done should you have excess wealth to give. Consider discussing the future with a financial advisor.
Ready to Get Started?
If you're excited about giving back and saving on taxes, QCDs could be the perfect fit for you. Schedule a meeting today with our team at Wooster Corthell to learn more about how QCDs can be a part of your charitable giving strategy.
For more insights and tips on smart financial planning, connect with Wooster Corthell on LinkedIn. You'll find valuable content to help you make informed decisions for your financial future.
Giving back is a wonderful way to make a positive impact. With Qualified Charitable Distributions (QCDs), you can support causes you care about and enjoy some tax benefits too. It’s a win-win that lets you do good while making your financial future brighter.