Qualified Charitable Giving Due Diligence
Each year more and more of my clients are utilizing the Qualified Charitable Distribution (QCD) strategy with their IRA accounts. These IRA distributions are delivered directly to the organization of a client’s choosing and are not treated as taxable income. If there is a Required Minimum Distribution (RMD) to be met, the QCD counts toward meeting the RMD. It’s a win-win.
Most charitable organizations we support, we know well like our local churches and community organizations or well-known national charities. The IRS states a QCD “is generally a nontaxable distribution made directly by the trustee of your IRA or an organization eligible to receive tax-deductible contributions.” What if we don’t know the organization as well as we’d like? How can we confirm if they are eligible to receive a QCD?
The IRS has a search tool to verify tax-exempt organizations: apps.irs.gov/app/eos – or you can search “Tax Exempt Organization Search” and easily find the tool.
What if you want to go deeper and understand more about the organization? The next stop should be the organization’s website to review its stated mission, leadership, and programs.
Charity Navigator could be a valuable last stop www.charitynavigator.org. This group analyzes and reviews 501(c)(3) nonprofits and rates them according to Financial Health, Accountability, and Transparency. Their tools can help you give with greater confidence and understanding.
Ultimately, we want our dollars to benefit organizations we care about in the most tax-efficient way possible. I’d be happy to discuss your charitable giving strategy or help in your due diligence!
Any opinions are those of Landon Vick and not necessarily those of RJFS or Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete; it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decisions.
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