Finally, the IRS has a Code for QCD

Taxpayers over age 70 1/2 are allowed a Qualified Charitable Distribution and the 2025 Form 1099-R will have a Code for That

Photo by Suzanne D. Williams on Unsplash

Taxpayers have been allowed to directly transfer funds from their IRA to charity for almost 20 years now and there can be substantial benefit for the taxpayers.

First, the taxpayer must be at least age 70 1/2 (not the year they turn that age). The 2025 limit is $108,000 per taxpayer; therefore a married couple could contribute $216,000 (assuming they have that much in their IRA). This is only available for IRA distributions.

The benefit is that the taxpayer is not required to report the QCD as taxable income on their income tax return. There is no offsetting tax deduction, but by reducing Adjusted Gross Income, the taxpayer may prevent other taxes from occurring such as the Income Related Monthly Adjustment Amount (IRMAA) for Medicare premiums, etc.