How can I model a qualified charitable distribution (QCD) from my RMD to reduce my taxable income, so that the amount of the QCD only reduces my tax liability, and not the amount of my after tax RMD?
You would speak to you IRA custodian to arrange it. Tell him what you aim to do. There are new rules for 2023...Beginning in 2023, you can include in your QCD a one-time gift of up to $50,000 to a split-interest equity, such as a charitable remainder trust (CRT) or charitable gift annuity (CGA). The $50,000 limit will be indexed for inflation, starting in 2024.
Also, QCDs don't require that you itemize, which due to the recent tax law changes, means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving.
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QCDs are permitted to come only from the pre-tax portion of your traditional IRAs, so QCDs are not included on Form 8606 when determining the taxable amount of any other traditional IRA distributions you make. Until your traditional IRAs contain no more than your basis in traditional IRA contributions, some portion of any other traditional IRA distribution you take will be taxable.
If more than the pre-tax portion of your IRAs is paid to charity, only the pre-tax portion is reportable as a QCD and the nontaxable portion can be treated as a Schedule A charitable contribution.
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