For many of us in Adams County, being generous with our money is one of life’s great joys.  While I would not go so far as to say the IRS also finds “joy” in individual giving, the federal government does recognize philanthropy’s benefits to society. That’s why our federal tax code incentivizes giving with tax breaks for donations to qualified charities.

You are likely familiar with the charitable tax deduction available to anyone who itemizes their deductions. But there’s another charitable tax incentive you may not know of: qualified charitable distributions (QCDs) from your IRA. This type of tax-advantaged gift may be used by anyone who has reached the age of 70 ½.

A QCD is a gift that you make from your IRA directly to a qualified charity. While the gift does not qualify for a charitable tax deduction, it is a withdrawal from your IRA that is not liable to income tax. Plus, a QCD counts toward your mandatory required minimum distribution. Beginning in 2024, you can now give up to $105,000 a year this way, completely free of federal income tax.

If you no longer itemize tax deductions, your donations to charity will not reduce your tax bill. By using a QCD for your charitable giving, you may still take the higher standard deduction while also reducing your taxable income.

A growing number of Adams Countians are discovering the benefits of QCDs. Just in the last  few months, more than 100 donors have used a QCD to support a variety of funds at the Community Foundation. While donor-advised funds (and private foundations) are not eligible to receive QCDs under IRS rules, many funds at the Community Foundation that benefit Adams County in many ways are eligible and have received QCDs from our generous local donors.

Donors have used QCDs to support our Fund for Adams County (our community grantmaking endowment), the Adams County Scholarship Fund, designated endowments for a host of nonprofits serving every sector of our community, field of interest funds that enable us to address changing needs in specific areas such as health, education, the environment, historic preservation and more, or simply to our Annual Fund to support everything we do as a community grantmaker and advocate for Adams County.

So let’s hear it for the IRS! The spirit and practice of giving is alive and well across our country, and I can tell you it’s thriving here in Adams County.

This information is not a substitute for expert legal, tax, or other professional advice. You should consult your professional advisor to determine the impact of making a QCD on your particular financial and tax situation.

For a step by step on how to make a charitable distribution from your IRA, click here.