Qualified Charitable Distributions Are Now Permanent!


Filed under: Financial tips


Accounting Series - Senior WomanIf you’re like most people, you enjoy making a difference in the world by giving to charity. You might also enjoy the tax deduction you can earn by doing so. But once you’re retired, your tax situation can change quite a bit, and you might need to structure your charitable giving a bit differently.

For years, many retirees enjoyed making qualified charitable distributions straight from their IRAs to the charities of their choice. But the tax code frequently changed. One year you could claim the deduction, the next year you couldn’t, and then the following year the IRS allowed it once again.

The good news is that the Protecting Americans from Tax Hikes Act of 2015 finally established qualified charitable distributions as a permanent income tax deduction. But if you want to make donations to charity in this way, you must carefully follow guidelines or you won’t be able to claim the deduction.

  • You must be age 70 ½ by the date of the distribution
  • First submit a distribution form to the IRA custodian, asking for a check made payable directly to the charity of your choice
  • Then ensure that no taxes are withheld from the qualifying charitable donation (all of the money must go to the charity)
  • Finally, you should have the check sent directly to the charity, or your IRA administrator can send you a check which you then forward to the organization

The important thing to remember is that the funds must travel directly from your IRA to the charity. You cannot take a distribution in any form, and then sign over the money to the group, or the money will be counted as a taxable distribution which adds to the total of your income for the year.

This method might be preferable to simply taking IRA distributions, which count as your income, and then making charitable contributions. Those are still tax deductible, but your overall income is higher and therefore taxed at a higher rate. If you’re going to give to charity anyway, using a qualified charitable distribution is a great way to accomplish that goal while keeping your taxable income a bit lower.

For more information on qualified charitable distributions, give us a call. We can help you decide the best way to give to your favorite charity, without violating rules that could cost you a valuable tax benefit.


If you would like more information or have specific questions, please contact us using the following form. We would be happy to assist you.

This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .