QCD vs. Direct Donation from an IRA
I’m trying to understand the distinction between a QCD and any other direct gift from an IRA to a qualifying charity. If someone younger than 70 1/2 were to make a direct gift from her IRA to the charity, apparently it is a two-step process with the first being a taxable distribution and the second being the gift. That would mean that the only way the gift would be deductible would be if she were able to use her itemized deductions. Is that the distinction?
Permalink Submitted by Alan - IRA critic on Fri, 2019-05-24 20:08
Yes, that is correct. To even come close to the benefit of a QCD, the person would already need to have other itemized deductions at least equal to the new higher standard deduction amount so that the entire distribution was offset. Even then the distribution would be included in AGI, whereas a QCD is not. Inclusion in AGI can result in lower itemized deductions and phase out of certain credits.