IRS Reminds IRA Owners of Tax-Free Charitable Transfer Option, IR-2023-215

The IRS has reminded individual retirement arrangement (IRA) owners, aged 70½ or older, of tax-free charitable transfers permitting senior citizens to contribute up to $100,000 annually to eligible charities free of tax. To avail the Qualified Charitable Distributions (QCDs), taxpayers must make transfers directly from the IRA trustee to the charitable organizations and this distribution can be availed by any eligible individual irrespective of their itemized deductions on Schedule A. Further, a married couple with both spouses meeting the age requirement can jointly exclude up to $200,000 per year.

Further, taxpayers must report all 2023 QCDs on the 2023 federal income tax return, which would be filed during the 2024 filing season. Like other IRA distributions, QCDs are to be reported on Line 4 of Form 1040 or Form 1040-SR. Although QCDs are not deductible contributions on Schedule A, donors must get a written acknowledgment of their contribution from the charitable organization before filing their return. For more information on IRA distribution and QCDs, visit the IRS website.