This article focuses on (Qualified Charitable Deductions) QCDs for those like me who will need to do (Required Minimum Distributions) RMDs but also points out how the new tax law will affect charitable giving:
CQDs:Get More from RMDs
It points out that the cap on deductions for state and local taxes and the increase in the standard deduction makes it harder to get a tax break from charity giving. You need to take these into account for your tax planning.
The tax law changes make a QCD even more valuable if you qualify i.e. It is only available to IRAs and individuals who have reached RMD age (70.5).
In that case, it allows you to transfer up to $100,000 per year from your IRA directly to a qualified charity. It is not taxed and counts toward the RMD.
The article goes on to discuss the mechanics of donating part of the RMD as a QCD.
This is something I definitely want to read more about.
obtaining the tax benefits for doing a QCD from an IRA to a charity requires meeting very specific requirements, including a minimum age limitation (70.5) , a maximum dollar amount limitation $100K, and contributing to only certain types of eligible (public) charities (rendering private foundations, donor-advised funds, and split-interest charitable trusts all ineligible).
In addition, there is the most stringent requirement – though also the easiest to satisfy – that for an IRA distribution to qualify as a QCD, the check cannot be made payable to the IRA owner and instead must be made payable directly to the charitable entity (though the check payable to the charity can be sent to the IRA owner and forwarded on to the charity).
What is a public charity?
A private foundation is any domestic or foreign organization described in section 501©(3) of the Internal Revenue Code except for an organization referred to in section 509(a)(1), (2), (3), or (4). In effect, the definition divides section 501©(3) organizations into two classes: private foundations and public charities.
Generally, organizations that are classified as public charities are those that
Are churches, hospitals, qualified medical research organizations affiliated with hospitals, schools, colleges and universities,
Have an active program of fundraising and receive contributions from many sources, including the general public, governmental agencies, corporations, private foundations or other public charities,
Receive income from the conduct of activities in furtherance of the organization’s exempt purposes, or
Actively function in a supporting relationship to one or more existing public charities.
Private foundations, in contrast, typically have a single major source of funding (usually gifts from one family or corporation rather than funding from many sources) and most have as their primary activity the making of grants to other charitable organizations and to individuals, rather than the direct operation of charitable programs.