Giving Strategies

Strategies for making your money do something for the world (and possibly help with your taxes)

Table of contents
INFORMATIONAL PURPOSES ONLY—Please consult your accountant or tax advisor for guidance on if this strategy fits your personal situation.

Qualified Charitable Distribution (QCD)

If you are over age 72 (73 if you reach age 72 after Dec. 31, 2022), the IRS forces you to take a distribution from your IRA. This is called a Required Minimum Distribution (RMD).

The RMD amounts is based on your life expectancy and the percentage required escalates each year.

The RMD amount, along with any other income is taxable income. This can impact the taxation of your Social Security and eligibility for certain Medicare benefits.

A Qualified Charitable Distribution is a transaction permitted by the IRS that allows you to take your RMD amount and give directly to a charity. This allows you to exclude the distribution from your taxable income.

You can give up to $100,000 per year from your IRA to a charity and not pay any income tax (only if you are over age 72).

The distribution MUST be made directly to the charity (check can not flow through you).

You are required to track the payment and reconcile your 1099 to your QCD amounts, so keep good records!

If you sell a stock or mutual fund at a higher value than you bought it, you pay a Capital Gains tax on the increase.​

You can donate shares of stocks or mutual funds directly to a charity. If you itemize deductions on your taxes, you are able to claim the fair market value of the shares on the day you donated them. You pay NO TAX on the gains.

The shares must have been held for at least 1 year.

It usually takes several weeks to process, so do not wait until year-end. Make sure you ask your brokerage or bank about their procedures!​

If the shares are below the value you purchased them, you can sell them and donate cash instead. The loss can be used to offset any other gains you had for the year and can reduce your taxable income by up to $3,000.

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