Deductible Charitable Contributions vs. QCDs – Understanding the Difference

John Robinson |

The elimination of personal exemptions, the $10,000 cap on state and local tax (SALT) deductions, the curbing of mortgage and home equity loan interest deductions, and the elimination of a number of common itemized deductions combined with the increase in the standard deduction under the Tax Cuts and Jobs Act means that far fewer people will realize tax benefits from making donations to charities in 2018 and beyond.

For charitably inclined IRA owners who are over age 70 1/2 , an increasingly popular solution to this problem is to distribute some or all of one’s annual required minimum distribution (RMD) as Qualified Charitable Distributions (QCD). FPH clients who are considering this strategy should be aware that the IRS QCD rules are different from the rules for making charitable donations from after-tax savings.