Giving More by Being Tax Smart – QCDs
Before we begin, let's consider these questions:
- Are you a senior? That is, are you at least 70 ½ years of age, or soon will be?
- Do you have an IRA?
- Are you a faithful giver to Due West?
- Do you love paying more in taxes than you are required to pay?
If you answered ‘Yes’ to the first three questions, and ‘No’ to the fourth, you may want to read the rest of this article.
Let's talk about a Qualified Charitable Distribution (QCD).
A QCD is a specialized IRS rule that allows seniors to donate money directly from their Individual Retirement Account (IRA) to a qualified charity (like Due West) without that money ever being counted as taxable income.
In 2026, this rule is more valuable than ever due to new tax laws that limit the benefit of traditional charitable deductions. Here is a breakdown of how it works and why it helps seniors maximize their giving.
- The Age Rule: You must be at least 70½ years old at the time of the donation and be the owner of the IRA.
- The Direct Transfer: The funds must move directly from your IRA custodian (e.g., Fidelity, Schwab, Vanguard) to the church. If the check is made out to you first, it won't qualify.
- The 2026 Limit: For the 2026 tax year, you can donate up to $111,000 per person (or $222,000 for a married couple with separate IRAs).
- Eligible Accounts: This applies primarily to Traditional IRAs, though inherited IRAs and SEP/SIMPLE IRAs also qualify. It does not apply to 401(k)s or 403(b)s.
Utilizing a QCD can help you donate more to Due West (or other qualifying churches or charities) in these ways:
1. Taking a QCD can work towards satisfying your Required Minimum Distribution (RMD) in a tax-free manner.
- The Rule: Once you reach age 73, the IRS requires you to take a Required Minimum Distribution (RMD) from your IRA each year. Normally, this RMD is taxed as regular income.
- The Benefit: A QCD counts toward your RMD but is excluded from your taxable income.
- The Result: If you were planning to give $5,000 to your church, doing it via a QCD means the church gets the full $5,000, and you don't owe a penny of tax on that withdrawal. This means you could take your tax savings and consider increasing your donation to Due West.
2. It Bypasses the Standard Deduction Trap
- Most seniors take the Standard Deduction because it is larger than their itemized expenses. If you take the standard deduction, you normally get no tax benefit for your church stewardship.
- The Benefit: Because a QCD is an above-the-line exclusion; you get the tax benefit in addition to the standard deduction. You are effectively lowering your taxable income before the IRS even starts looking at your deductions.
3. It Can Lower Your Social Security and Medicare Costs
- Because a QCD reduces your Adjusted Gross Income (AGI), it can provide hidden savings that a regular donation cannot:
- Medicare (IRMAA): Higher AGIs can trigger much higher Medicare Part B and D premiums. A QCD keeps your AGI lower, potentially saving you thousands in premiums.
- Social Security: Lowering your AGI can reduce the percentage of your Social Security benefits that are subject to federal income tax.
Important First Dollars Out Warning:
The IRS follows a First Dollars Out rule for RMDs. If you take your full RMD as cash in January and then try to do a QCD in December, the December gift will not count toward your RMD - - it will just be an extra donation.
Pro Tip: To maximize the benefit, it is best to process your Due West donations as QCDs early in the year or before you have fully satisfied your RMD for the year.
If you want to begin donating to Due West by making a QCD, start by reaching out to your IRA custodian. Normally, you can go to their website to find out exactly what you need to do.
You’ll eventually need this information:
Due West Methodist, Inc.
Tax ID No. / EIN - - 93-3503078
3956 Due West Road
Marietta, GA 30064
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This is not tax or legal advice. You should do your own research and/or contact a tax professional for assistance.
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