November 4, 2018

If you are over 70 ½ years old you are required to take money out of your individual retirement account (IRA). Normally when you take money out of your IRA this becomes a taxable event and raises your adjusted gross income. If you intend to give this money to charity, your taxable income is reduced by the amount of the gift after the donation. However, your adjusted gross income remains higher.

A way around this is through a Qualified Charitable Distribution (QCD). In this instance money from your IRA you were intending to use for charity is given directly to the organization. This direct giving prevents the gift from being a taxable event and does not increase your adjusted gross income.

One of the factors that must be satisfied to count as a QCD states that the distribution from your IRA must transfer directly to a “qualified charity.” This official IRS designation includes all 501(c)(3) organizations, which WWOA is. A Qualified Charitable Distribution is something to keep in mind for this tax season if you are already considering giving a gift to WWOA.

More detailed information about this topic can be found in this article from Forbes.