Don’t Forget About Qualified Charitable Distributions Before End of 2023
As the end of 2023 draws near, we want to remind you about the qualified charitable distributions that could benefit your non-profit and the individual donor. Qualified Charitable Distributions (QCD) are donations that a retired individual can donate directly from their IRA account to tax-exempt organizations. Once someone reaches retirement age, currently set at 72 years old (or 73 for those who turned 72 after 12/31/22), they must take a Required Minimum Distribution (RMD) from the savings in their taxable IRA accounts.
Since RMDs are considered taxable income that not all taxpayers need in retirement, they can instead make a QCD as early as age 70 ½. Doing this reduces the donor’s taxable income for the year while allowing them to support charities and causes that are important to them.
QCDs benefit any donor, whether they designate a few hundred dollars or thousands. Individual donors can contribute up to $100,000 per year, and married couples can contribute $100,000 each if they meet the age requirement, giving them a combined $200,000. These contributions can be made as one large donation or several small donations throughout the calendar year.
Make sure you are educating and reminding your donors about QCDs and how they are something that will be of great benefit to your organization as well as their personal taxable income. If you inform them about QCDs, your organization could reap the reward and be the first to receive those donations. For more information and resources to share with your supporters, read this article from the IRS.
Since retired individuals must take RMDs each calendar year, this provides you with an excellent opportunity to solicit repeat QCDs, reminding them that it does not have to be a one-time donation. It is also essential to keep a detailed donor database to keep your supporters informed of your programs and to have the chance to remind them of donation opportunities that would benefit them.
We hope this information is helpful and encourage you to reach out with any questions.
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Our firm provides the information on our blog/vlog for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
