Qualified Charitable Distributions (QCDs)
This topic details the key IRS requirements from Publication 590-B (2024) that are relevant for charitable organizations accepting Qualified Charitable Distributions (QCDs) from Individual Retirement Arrangements (IRAs). These distributions have specific substantiation and reporting requirements that church and non-profits need to be aware of.
What are QCDs? QCDs are gaining popularity because they fulfill the donor's annual Required Minimum Distribution (RMD) obligation. A QCD allows individuals aged 70½ or older to transfer up to $105,000 per year directly from their IRA to a qualified charitable organization. Donors benefit from giving to the church this way because these distributions are excluded from their taxable income.
Implications for Contribution Statements
- Identifies the source of the funds as a QCD from an IRA.
- States the amount received. This amount should match the value of the IRA distribution.
- Excludes QCDs from deductible donation totals. (Since they are already excluded from taxable income, they can't also be tax-deductible.)
Example Language
A church might choose to send acknowledgments. For example, "Thank you for your generous qualified charitable distribution of $5,000 made on March 15, 2025 from your IRA to Beavercreek Church. No goods or services were provided in exchange for your contribution, other than intangible religious benefits. This distribution may be eligible for exclusion from taxable income under IRS rules."
Reporting by the Donor
The donor must report the QCD on their tax return as a non-taxable distribution from the IRA on Form 1040 (line 4a for IRAs). The donor must reduce the IRA deduction on their tax return by the amount of the QCD if they itemize.
- QCDs cannot be used to fund donor-advised funds, supporting organizations, or private foundations.
- QCDs cannot include funds for which the donor has already claimed a tax deduction, such as funds contributed after tax to a Roth IRA.
QCDs in MinistryPlatform
MinistryPlatform has a Qualified Charitable Distribution payment type to help donors substantiate their IRA contributions. This is a special non-deductible payment type; the amount displays on the statement.
This payment type is an exception to the MinistryPlatform rule because the program typically determines deductibility. These donations will show on a statement by default, regardless of the program. They print on a separate page, ensuring that the totals do not mix with the tax-deductible totals for cash donations.