If you are older than 70.5 years, have an IRA, and make charitable contributions, you can reduce your taxable income using Qualified Charitable Distributions (“QCD”) to UUSM and other charities. A QCD is simply a check drawn directly from your IRA to the charity. The total amount of the QCDs is subtracted from your gross income before deductions; this may keep you out of a higher tax bracket. If you are in the 12% marginal tax bracket, $1,000 in QCDs saves $120; if in the 22% bracket, $1,000 saves $220.
About one-third of our congregation is 70.5 or more years old. About 30% of taxpayers have IRAs. About 90% of taxpayers use the Standard Deduction.
Recent years’ higher standard deduction levels often exceed the total of itemized deductions. This causes itemized “tax-deductible” charitable contributions to not reduce your taxable income, as they are included in the standard deduction. Even if your itemized deductions exceed the standard amount, using QCDs is better than itemizing your contributions.
Ask your tax preparer or investment advisor about having your IRA custodian set up an IRA checking account and send you checks to use to make QCD contributions. Remember to include a note to the charity (UUSM or other) to acknowledge the donation not just as “tax-deductible” but as a QCD check drawn directly on your IRA.
