If you do QCDs prior to RMD years, there is no current year tax benefit since current taxes are not reduced, whereas they would be if you had enough itemized deductions to itemize prior to including the donations. However, QCDs done prior to RMD years do reduce your IRA balance and therefore reduce future RMDs. If you donated via QCD from 70.5 through the end of year 72 that added up to 10% of your IRA value, your RMDs would start 10% lower.Yes, I think that there are advantages to starting now.
You've implied that you're currently writing out checks to your charities so those charitable contributions have been part of your taxable cash flow (meaning, you're paying charities with post-tax dollars).
If you start using QCDs now, you'll stop (or decrease) your current checkwriting to your charities--thereby effectively increasing your money in your taxable account (you'll be paying the same amount to charities in pre-tax dollars).
So why would you wait?
Conversely, QCDs done starting with the first RMD year directly reduce the taxable income from the RMD by the amount of the QCD. saving tax dollars in the current year.
Most people who would start QCDs at 70.5 would reduce their IRA balance by year 73, then continue to do QCDs each year. These taxpayers would have reduced the IRA balance and therefore the RMD and further reduce the taxable portion of the RMD in addition.
Statistics: Posted by Alan S. — Mon Mar 04, 2024 3:50 pm — Replies 4 — Views 266