Good News: Donate To BTBR From Your IRA and Reduce Your Taxes!

Did you know you can make a charitable donation to the Black Tie Boston Rescue directly from your IRA? It’s called a Qualified Charitable Distribution, “QCD”--and it benefits you and us!

  • You make a QCD donation to your favorite charity … BTBR.
  • The BTBR donation counts toward your required minimum distribution (“RMD”) If you’re 73 years old or older, you must withdraw money from your IRA—that’s the RMD--whether you want to or not.
  • Your QCD reduces your adjusted gross income (AGI) and doesn’t generate a tax bill.
  • Keeping the donation out of your adjusted gross income matters because:

(1) It helps you qualify for other tax breaks (i.e. having a lower AGI can reduce the threshold for deducting medical expenses, which are only deductible to the extent they exceed 7.5% of AGI);

(2) Reduces taxes on your Social Security benefits; and,

(3) QCDs don't require you to itemize, which means you can use the standard deduction, but still use a QCD for charitable giving.

Are you eligible to make a QCD? While many IRAs are eligible for QCDs (Traditional, Rollover, Inherited, SEP [inactive plans only], and SIMPLE [inactive plans only]) — there are specific requirements:

  • You must be 70½ or older to be eligible to make a QCD.
  • QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
  • The current maximum annual amount that can qualify for a QCD is $105,000. This applies to the sum of all QCDs made by you to one or more charities in a calendar year. (If you file taxes jointly, your spouse can also make a QCD from their IRA within the same tax year for up to $100,000).
  • For a QCD to count towards your current year's RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
  • Amounts donated above your RMD don’t count toward satisfying a future year's RMD.

Keep the records from your IRA custodian showing that the money was transferred directly to BTBR. And keep the acknowledgment from BTBR, as you would with any other donation.

A tax advisor can help you determine if your IRA qualifies for QCDs, the impact on state withholding and how to properly fill out tax forms so that you don’t overpay.

Thank you for helping us … while managing your finances.