If you have one or more traditional IRAs and are age 73 or older, you are probably familiar with three of the most dreaded letters in the tax world: RMD, short for required minimum distribution. Starting in the year when you turn 73, the IRS requires you to withdraw a certain amount from your traditional IRAs annually. This amount is based on your age and increases as you get older.
RMDs are taxable income, which is precisely why many retirees dread them. But if you’re charitably inclined, there’s a powerful way to meet your RMD requirement without increasing your taxable income: the qualified charitable distribution, or QCD. The trustee of the IRA must transfer the RMD to the charity. An IRA distribution, such as an electronic payment made directly to the IRA owner, does not count as a QCD. Likewise, a check payable to the IRA owner is not a QCD.
The QCD amount counts toward your RMD for the year but doesn’t count as taxable income. Even better, you can use a QCD whether you itemize deductions or take the standard deduction. Therefore, you can still benefit from charitable giving on your tax return. This can be a massive benefit for taxpayers who otherwise would take the standard deduction and lose most of the benefit from a charitable deduction!!
Most seniors opt to take the Medicare Part B coverage when they qualify. Medicare Part B and Part D premiums will adjust based on your income using the Income-Related Monthly Adjustment Amount (IRMAA). Suppose your modified adjusted gross income (MAGI) from two years prior is above certain thresholds. In that case, you’ll pay a higher premium for Part B and Part D. Medicare adjusts these thresholds annually based on whether you file your taxes individually or jointly. For 2025, the IRMAA applies if your 2023 modified AGI is above $106,000 for singles, or $212,000 for married filing joint couples.
If you take your normal RMD, that amount adds to your other income and could result in you paying a larger monthly premium to Medicare. Using a QMD avoids that possibility since the distribution directly to the charity does NOT increase your modified adjusted gross income!!
The other benefit is the AGI limitation for medical expenses as an itemized deduction. The 7 ½% adjusted gross income (AGI) limitation reduces the deductibility of medical costs (insurance premiums, co-pays, and deductibles).
In short, a QCD can help you
· satisfy all or part of your RMD for the year;
· support the charities you care about;
· avoid reporting the RMD as taxable income; and
· reduce the risk of being pushed into a higher tax bracket.
While RMDs don’t start until age 73, you can make QCDs when you turn 70 1/2.
The annual QCD limit is generous: up to $108,000 per person per year. For married couples filing jointly, each spouse can make a QCD of up to $108,000 from their own IRA, for a combined total of $216,000 for 2025.
The QCD must go to a Section 501(c)(3) charity, such as a church, school, college, or other non-profit organization. Be careful – you cannot make QCDs to donor-advised funds or private foundations.
Your best choice is to have your IRA trustee transfer the QCD directly from your IRA to the charity. Also, ensure you get a written acknowledgment from the charity for your records. In general, the acknowledgement must state the date and amount of the contribution and indicate whether the donor received anything of value in return. You must receive that letter before the earlier of (a) when you file the return, or (b) the due date for the return, including a timely filed extension. I also recommend attaching a copy of the acknowledgment to the return as evidence of the QCD contribution. It could help avoid an audit.
If you plan to withdraw multiple times from your IRA during the year, make the QCD first. The IRS treats your first withdrawal as your RMD, so taking the QCD first ensures it counts toward your RMD. And most importantly, don’t forget to let your tax preparer (me) know you made a QCD. We need to report it correctly on your tax return.
Like other IRA distributions, you report QCDs on Line 4 of Form 1040 or Form 1040-SR. If part or all of an IRA distribution is a QCD, enter the total amount of the distribution on Line 4a. This is the Box 1 amount on Form 1099-R. Then, if the full amount of the distribution is a QCD, enter 0 on Line 4b. If only part of the distribution is a QCD, then enter the non-QCD amount on Line 4b. Be sure to enter “QCD” next to Line 4b. Unfortunately, there is no code to enter on the 1099-R to identify the distribution as a QCD.