Craig Wear explains Qualified Charitable Distributions, which let IRA owners send required minimum distributions straight to charity instead of taking the money personally and paying taxes on it. The direct transfer counts toward your RMD, stays off your taxable income, and lowers your adjusted gross income.
If you want to bypass getting taxed on your charitable donations, you're going to want to use something called a qualified charitable distribution, QCD. Here's how it works. Instead of taking your required minimum distribution or your RMD into your personal account first, and then writing a check to the charity, you tell your IRA custodian to send the money directly to the charity. That's it. The custodian writes the check, not you. And when that happens, 3 powerful things occur. 1, the money counts toward your RMD. 2, it never shows up as income on your tax tax return, and 3, your adjusted gross income stays lower because of that. So picture two roads. The first road, your RMD comes out of your IRA and goes through a tax toll booth. Uncle Sam takes their 20%, 30%, or maybe 35%. Then what's left goes to charity. The second road, your RMD goes directly from your IRA to the charity. It bypasses the toll booth completely. Same donation, zero tax.
