There is a great new way to give for people 70-1/2 and older who have an IRA. Actually, it is not new, but now it is permanent and advantageous even for middle class taxpayers for their federal and state income tax. Many people will not be able to itemize deductions on federal income taxes since Congress doubled the standard deduction. For a married couple, the 2018 standard deduction is now $24,000. In 2017, 70% of Americans did not have enough to itemize. Now, with the doubled standard deduction, it is estimated that 90%-95% of Americans will not have enough to itemize deductions.
The IRS calls this a QCD (Qualified Charitable Distribution). You must be 70-1/2 years old and give to a qualified charity (church) directly from your IRA. You can use it to satisfy the RMD (required minimum distribution) that you must take beginning in the year that you reach 70-1/2 years old. There are significant tax advantages to giving to the church this way as opposed to taking the RMD to your taxable account, giving to the church from a taxable account and then trying to claim a deduction on your income taxes.
The tax advantage of this is not that it is tax deductible (it is not); it is that the donor never received it as taxable income.
See your tax advisor for more information.
Important Information for the Church Treasurer
If the church receives a Qualified Charitable Distribution, the check will come directly from the IRA provider. The paperwork will explain that it is a QCD. You are not to include this as a tax-deductible contribution on the giving statement.
Instead you should acknowledge it with a letter on church letterhead: “Thank you for your donation of $10,000 given to First Baptist Church on January 25, 2019. This was a Qualified Charitable Distribution direct from your IRA, so it will not be reported on your contribution statement. No goods or services were given in exchange for your contribution.”
Lee and his wife, Linette, are members of Heritage Baptist Church, Montgomery. They have two daughters.