Generally, all distributions from IRA (excluding Roth) and 401(k) accounts are included in taxable income. An exception is available for donors who are 70 ½ or older under the qualified charitable distribution (QCD) rule. Those donors can direct amounts from their IRA and 401(k) accounts to qualified charities and exclude the donated amount from taxable income. Abolish Private Prisons is a qualified charity.

QCDs must be transferred directly to the charity. Donors will lose the deduction if the distribution is paid first to them and then passed on to the charity.

QCDs can be included as part of the annual required minimum distributions that donors must withdraw. Using this method provides a tax benefit for donations without having to itemize deductions. Reporting lower adjusted gross income (AGI) may also help a donor stay in a lower tax bracket or reduce taxation of social security benefits.

Note: The IRA custodians will report the total amount of distributions, including QCD amounts, on year-end 1099s. Donors must provide their tax professionals with the QCD information to alert them of the reduced taxable amount. Online and other tax programs that donors may use to prepare their taxes include a question or line to report QCDs.

by Julie Ferrell