Qualified Charitable Distributions (QCDs) from IRAs Reinstated for 2014
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taxincreaseQualified Charitable Distributions (QCDs), which allow individuals over 70 1/2 to contribute to public charities directly from their IRAs, expired at the end of 2013. However, on December 19, 2014, the President signed the Tax Increase Prevention Act of 2014, which reinstated QCDs up to a $100,000 limit for 2014. Contributions count towards an individual's minimum distribution and are not included in income. If you take an IRA distribution and then make a charitable contribution, you may not be eligible for the full deduction. For example, you could end up paying taxes if:
  • the additional income from the IRA distribution raises your income to the point that other deductions or credits are reduced
  • a state does not allow a full deduction for charitable contributions
  • if you don't itemize deductions
  • if your charitable contributions exceed the limit
QCDs avoid these issues. While QCDs can provide tax savings, they may not be the best choice for you. If you had securities that appreciated in 2014, contributing those to charity may offer a greater tax benefit. Note this extension is for 2014 only at this point. Proposals to make QCDs permanent have not yet been enacted.
Posted under: Tax Law

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