Using The QDC Rule To Reduce Tax Liability

In late 2015 Congress has finally made a charitable provision in the Tax Code permanent.  “For the past few years, Congress has created a temporary rule that allowed traditional IRA owners to exclude their required minimum distributions (RMDs) from their adjusted gross incomes if they transferred this amount to a qualified charitable organization.”  In the past this was not a permanent rule and Congress would have to regularly renew it at the last minute making long-term planning difficult for advisers and their clients.  This article provides important information about the eligibility requirements for using the qualified charitable distributions (QCD) rule.  It discusses what contributions and earnings are eligible for QCDs and the advantage this rule can have for a person’s adjusted gross income (AGI).  People need to be aware of the payout rules that require distributions to be made directly to the charity. 

See Mark P. Cussen, How to Use the QCD Rule to Reduce Your Taxes, Investopedia, March 21, 2016.