Changes outlined in the 2018 Tax Cuts and Jobs Act mean it’s less likely that you will itemize your deductions, instead opting to claim the higher standard deduction. Enter the qualified charitable distribution (QCD), also called a charitable IRA rollover. A QCD allows you to benefit from your charitable donations even if you are not itemizing.
Using a QCD is a tax-savvy strategy that allows you to transfer up to $100,000 per year from your IRA directly to a qualified charity. It is only available to IRAs and for individuals who have reached required minimum distribution (RMD) age (70.5). Any amount processed as a QCD counts towards your RMD requirement and reduces the taxable amount of your IRA distribution. This lowers both your adjusted gross income and taxable income, resulting in a lower overall tax liability.