A Qualified Charitable Distribution is when you have an IRA distribution paid directly to a charity. IRA owners who are 70 ½ and older can transfer up to $105K directly from their IRA to a charity. The QCDs can count as part or all of your RMD, but they are not taxable and they are not added to your AGI. This can help mitigate your Medicare Part B premium surcharge.
QCDs cannot be done through a 401(k) or other workplace plan. You cannot deduct the QCD as a charitable contribution on your Sch A.
So, when does a QCD help reduce your tax liability? It really depends on whether you itemize.
If you are going to itemize anyway, then the QCD will not affect your tax burden. The QCD could, however, prevent you having to pay the Part B premium surcharge.
If you do not itemize, then the QCD will prevent you from having to pay income tax on the distribution. It could also prevent you from having to pay the Part B premium surcharge. We can always sit down with you to do an analysis to sort this out for you.
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