- A QCD is not included as income and is not taxed (IRA distributions are typically taxed as ordinary income). A QCD cannot be claimed as a tax deduction if you itemize your deductions.
- There is an annual maximum gift limit of $100,000 per IRA owner.
- The distribution is sent directly from the IRA to the charity (The IRA owner never touches the distributed funds).
- A QCD counts toward the IRA owner’s Required Minimum Distribution obligation that must be taken out of the account each year.
- A QCD could be an effective way to reduce taxable income for those who plan to do charitable giving and take the standard deduction when filing their taxes.
- An IRA distribution to a Donor Advised Fund (DAF) does not qualify as a QCD, so the distribution would be taxed, although the gift to the DAF would still be tax deductible. A DAF is “a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organizations, families, or individuals.”