Best Accountants in Tupelo, MS

Charitable Contributions Can Reduce Tax on IRA Distributions – Did You Know?nnIn general, distributions from a traditional IRA are taxable income. However, if you have a traditional IRA and are age 70 1/2 or older, you may have the option of making tax-free charitable contributions through your IRA. A qualified charitable distribution (QCD) is a contribution made directly to an eligible charity from IRA funds. The account trustee, such as a bank or investment broker, must arrange and execute the contribution.nnA QCD counts toward your annual required minimum distribution (RMD). Therefore, if you do not need funds from your traditional IRA this year, making a QCD may enable you to satisfy RMD rules without owing tax on the distribution. You must report QCDs on your tax return on the line for IRA distributions, but you may usually report the taxable portion of a QCD as zero.nnLimitations on the nontaxable amount of a QCD may exist, depending on factors like your recent IRA contribution amounts. A tax professional can help you verify your eligibility to make a tax-free QCD, and properly arrange and report the transaction to comply with all IRS rules.