IRS Reminds Taxpayers Age 70.5 & Older About Benefits of Qualified Charitable Distributions

The IRS has released a reminder for taxpayers aged 70.5 and older about the benefits of using a qualified charitable distribution (QCD) this holiday season. If a client is over age 70.5, a transfer made directly from the client's IRA to a qualified charity (including 501(c)(3) organizations, but not donor-advised funds, foundations or charitable gift annuities) will count toward the client's RMD and is entirely nontaxable. Beneficiaries who are over age 70.5 are also permitted to make QCDs, so long as the beneficiary also meets all other basic requirements for the transaction. QCDs can only be made from a traditional IRA or an inherited IRA. In order to have the distribution counted as a QCD, the client must have the amount transferred directly to charity and report that amount on his or her tax return as a QCD. The full amount is reported on the client's Form 1040 under IRA distributions, but the client enters "0" if the entire amount was a QCD (noting "QCD" next to that line). For more information on the rules governing QCDs, visit Tax Facts Online. : Q 8112.