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What is a Qualified Charitable Distribution?

SOLVEDby TurboTax1111Updated December 15, 2023

A qualified charitable distribution (QCD) is a distribution of funds from your IRA (other than an active SEP or SIMPLE IRA) directly by the trustee to a qualified charitable organization.

A qualified charitable distribution can satisfy all or part of your required minimum distribution for the year. You can make a qualified charitable distribution for more than the required minimum distribution, but you cannot apply any excess to a future year required minimum distribution.

Note: To report a qualified charitable distribution on your Form 1040 tax return, you'll use the 1099-R (even though there's no indication that it was a QCD). Enter the info as a 1099-R and you'll be asked in one of the follow-up questions if it was a Qualified Charitable Distribution.

TurboTax includes the full amount of the distribution reported on your Form 1099-R on line 4a (IRA Distributions) of your Form 1040 or 1040-SR. The taxable amount reported on Line 4b will be the total distribution less the QCD amount and will have "QCD" entered next to it.

Some Rules

  • You don't have to itemize to make a QCD and you cannot claim a charitable contribution deduction for any QCD not included in your income.
  • QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income.
  • A distribution made directly to the IRA owner, who then gives it to a charity, doesn't qualify as a QCD.

Qualifications

  • You must be 70 1/2 or older to make a QCD. A QCD can be made when you reach the age of 70 1/2, even if you're not subject to RMDs until the age of 72 or 73.
  • The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. If you file taxes jointly, your spouse can also make a QCD from their own IRA within the same tax year for up to $100,000, for a potential total of $200,000.
  • For a QCD to count towards your current year's RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
  • Contributing to an IRA may result in a reduction of the QCD amount you can deduct. If you make a deductible IRA contribution after you turn 70 1/2, it will reduce the amount of the QCD that's excluded in your gross income.

The Charity

  • The charity must be a 501(c)(3) organization and eligible to receive tax-deductible contributions. Certain charities aren't eligible to receive QCDs, including donor-advised funds, private foundations, and supporting organizations.
  • You aren't allowed to receive any benefit in return for your charitable donation
  • The charity must give you the same type of required acknowledgment for your contribution that you would need in order to claim the deduction for a charitable contribution.

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