I understand if I make a charitable donation — a qualified charitable distribution — from my IRA, it counts toward my annual required minimum distribution, but isn’t taxable. How can do I do this?
Ask how your individual retirement account custodian handles QCDs. A QCD must be drawn on your IRA and payable to an eligible 501(c)(3) organization. The transaction must be completed by Dec. 31 for you to get the tax benefit — so give yourself plenty of time to gather the information you need.
Some custodians send checks for QCDs you’ve authorized directly to the charities you identify. In this case, it's important to make sure the custodian will include information identifying you as the donor, said Alan E. Weiner, a Plainview tax accountant. That doesn’t always happen. You may want to alert the charity to expect the check.
Other custodians make out the checks and mail them to you, and you forward them to the charities. "Some financial institutions state that the check must go directly from the IRA custodian to the charity," Weiner said. "That's not correct. The check must be made out to the charity, but the donor can mail it." If your custodian gives you check-writing privileges on your IRA, he adds, you can write QCD checks yourself. Mail them with a note providing your contact information and ask for a receipt saying you received no goods or services in return for your donation.
Eventually, you’ll get a Form 1099-R reporting your total annual IRA distributions. Report that number on Line 4a of your tax return. Subtract your QCDs and put the result — your taxable IRA distributions — on Line 4b, writing "QCD" to its left.
The bottom line
QCD checks must be payable to charities, but you can mail them yourself.