By Carolyn Degnan

A little-known charitable tax deduction allows individuals and couples over the age of 70½ to transfer funds from an Individual Retirement Account (IRA) directly to a charitable organization (such as LymeDisease.org).

It’s called a qualified charitable distribution (QCD).

This not only helps the charity, but it can also help you reduce the taxes you pay.

Here’s how it works

• The donor requests his or her IRA plan administrator to transfer funds to a charitable organization. Be aware that donor-advised funds (DAF), supporting organizations and private foundations are not included under the provisions.
• The IRA administrator transfers funds directly to the charitable organization. Note: you can suffer tax consequences if the distribution is made to you and not the charity.
• The amount of the QCD is then deducted from the donor’s adjusted gross income for that taxable year.

Benefits of the QCD

• At age 70 ½, you can deduct up to $100,000 from your IRA and have it offset your federally reported retirement income. Check with your tax advisor regarding state and social security taxes.
• When you turn 72, you may be subject to the federally taxable “required minimum distribution” from your IRA(s) and other retirement accounts. A QCD counts toward the owner’s minimum required distribution.  Note: Congress suspended the required minimum distribution for tax year 2020, but it is back for tax year 2021.
• Recent procedural changes may allow you to call your IRA administrator and have the check (payable to your favorite charity) sent directly to you to send to the charity.
• The IRA qualified charitable distribution allows donors who do not itemize deductions to contribute IRA assets to charities and enjoy tax benefits similar to those derived from claiming itemized charitable deductions.

Please keep in mind that you should always consult your tax advisor before making any IRA deductions. Individual state tax laws vary.

LymeDisease.org is an authorized 501(c)3 charity and thus can participate in qualified charitable distributions. If you have any questions please call Carolyn Degnan, COO at 510-807-0133 (LymeDisease.org’s donor phone line).

Carolyn Degnan is Chief Operating Officer of LymeDisease.org. Email her at cdegnan@lymedisease.org.