Community Fund of Sun City West, Inc.

The Community Fund of Sun City West - Neighbors Helping Neighbors.


What Is an IRA Charitable Rollover (Qualified Charitable Distribution)?

Traditional IRAs require you to make RMDs annually once you reach age 70.5. Because you did not pay federal income tax when you contributed the money to your account, you need to pay tax when you withdraw it.

However, you can avoid the tax on that distribution by donating directly from your IRA to a charity. This is called an IRA charitable rollover, though you may sometimes see it referred to as a qualified charitable distribution (QCD).

This means that rather than paying tax on the money, it goes directly to a cause you believe in and want to support. This could also have the effect of reducing the impact of some tax credits and deductions such as Social Security and Medicare.

How Qualified Charitable Distributions Work

In order to make a QCD, you need to donate straight from your IRA to a qualified charity. The money never hits another of your personal accounts. A charity can qualify for a tax-deductible, qualified charitable distribution if it is a 501(c)(3) organization. Private foundations, donor-advised funds and supporting organizations do not qualify.

You need to be at least 70.5 to make a QCD, and the maximum annual exclusion for QCDs is $100,000. That means you can deduct up to $100,000 in charitable contributions from your income taxes. If you file a joint return, you and your spouse each have a $100,000 exclusion limit. You will need to pay income tax on any distributions above the exclusion limit. Note also that it is possible for a QCD to cover your entire RMD.

You can deduct this contribution from your taxes even if you take the standard deduction or don’t itemize deductions in your federal income tax return. State laws may vary so it’s a good idea to talk with a tax expert if you have specific questions.

You may also be able to make QCDs from SEP and SIMPLE IRAs.

Reporting a Qualified Charitable Distribution on Your Taxes

You will report a QCD the same way you would report a normal distribution from your IRA. Use Form 1099-R for the tax year that you made the distribution. So, if you made the distribution in the 2018 tax year, report it on Form 1099-R with your 2018 tax return.

On your Form 1040, report the full amount of the QCD on the line for IRA distributions. If the amount covered your entire RMD, enter a zero on the line asking for the taxable amount.

If you made a QCD but it did not cover your entire your entire RMD, you will need to make an additional distribution. You will need to file Form 8606, Nondeductible IRAs, to report that you made this additional distribution.

Bottom Line

A qualified charitable distribution, also called an IRA charitable rollover, allows you to lower your tax bill if you contribute money directly from your traditional IRA to a charity. The charity needs to be a 501(c)(3) organization, and you can deduct up to a limit of $100,000. You have the same personal limit even if you file a joint return. You will need to use Form 1099-R to report this distribution. You will also need to file Form 8606 if your QCD doesn’t cover your entire RMD.


Legacy Giving - make an investment in the Community Fund.

As an independent charity the Community Fund relies on volunteers, donations and gifts in Wills. Legacy gifts are an important part of our financial well being.  Making a Legacy gift to the Community Fund is simple and straight  forward.

The following is an example:
Yes, I want the Community Fund of Sun City West, Inc., 13940 W. Meeker Blvd., #115, PMB 613, Sun City West, AZ. 85375, to continue its critical work of assisting SCW residents in financial hardship with my gift of ___________.

This declaration in your Last Will and Testament is sufficient (see your legal representative).  Leaving a legacy gift means making a difference in someone’s life in the future. Your legacy gift to the Community Fund will help us continue our good work in SCW.