Save Cash with this Tax Strategy

A lot of people make donations to their favorite charity or religious organization.  And in most cases, the individual writes a check and, hopefully, takes a charitable tax deduction when it is tax-filing time.

An often-forgotten tax strategy is the Qualified Charitable Deduction (QCD).  The QCD is a different take on securing a tax benefit for older taxpayers.  Here are the basics:

  • At age 72, you must begin taking Required Minimum Distributions (RMDs) from your retirement accounts.  Those distributions are taxed as ordinary income.
  • Beginning with the calendar year you turn age 70½, you can distribute up to $100,000 from an IRA account directly to a qualified charity (including a religious organization)…a QCD.
  • While you do not receive a deduction for a QCD, it will reduce your adjusted gross income (AGI), which can lower your taxes on AGI items such as Medicare and Social Security.

So, if you are age 70½ or older, are planning to pull money from an IRA; and plan to give to charities, explore the tax advantage of the QCD.  Your tax or financial advisor can show you how.

Challenge: If you know someone age 70 ½ or older, ask them if they are familiar with the QCD tax strategy or share this article with them to see if they can benefit from it.

For weekly insights, follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.


professional photo of certified financial planner Stewart Welch wearing black suit and red tie

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the author or co-author of six books, including 50 Rules of Success J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch GroupConsult your financial advisor before acting on comments in this article.



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