What is a QCD?

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What is a QCD?

00:00:05
Welcome to Cornerstone clips. Today we are going to discuss qualified charitable distributions.
00:00:12
If you’re over 70 1/2 and you’re taking a required minimum distribution, you’ve probably heard about this. It’s a great way to save some additional taxes and benefit charities you love.
00:00:26
Typically, when you give to charity, you take a deduction on your tax return as an itemized deduction. You may have realized the last number of years as possibly you no longer have interest expense and other deductible items that it’s pretty hard. To to get enough itemized deductions to use that style of tax savings. So, the average American now is using the standard deduction. What’s great about a qualified charitable distribution.
00:00:59
Is that you can still take your standard deduction, and you can also reduce your income in accordance to what you give to charity. Sounds pretty good, doesn’t it? So, to dig a little deeper, when you actually process a qualified charitable distribution, you no longer give from your bank account or credit card, instead, you have your IRA or 401K provider, if they allow it, send a check to the charity of your choosing directly for you.
00:01:31
When your 1099 comes at the end of the year, you’re going to notice that it it does not account for that distribution of the charity. There’ll be a box checked that says taxable amount undetermined. That allows you to add up everything you gave direct to charity. And let’s say your your required minimum distribution was $30,000 for. That year, if you gave 10,000 of it to charity, as as a qualified charitable distribution, also known as QCD for short.
00:02:01
Then you would show on the front page of your tax return 30K gross distribution and tax will amount 20K on the end of your return. You’d still take the standard deduction, and that’s where you’ll see an added benefit for giving directly to charity as part of your required minimum distributions. Thanks for joining us today. If you want to know more about this, feel free to give us a call.