Qualified Charitable Distributions (QCDs): The Secret Way to Lower Taxes with Charity Donations!

If you're age 70 and a half or older, you are likely giving cash to your favorite charities like most people. That's thoughtful. But, it's the wrong way to give! There's a powerful way to give to charity while lowering your taxable income at the same time—and most retirees don't realize how much it can save them.

In this video, we break down exactly how a qualified charitable distribution or QCD works and why it's one of the most tax-efficient giving strategies available to IRA owners.

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You'll learn why a QCD is different from simply taking a withdrawal and writing a check to charity, and how it lowers your adjusted gross income even if you take the standard deduction. We explain how reducing AGI can help you avoid IRMAA surcharges on Medicare premiums two years from now and potentially reduce how much of your Social Security is taxed.

We walk through a real example showing how a Virginia couple with $2.4 million invested can use $30,000 in QCDs to satisfy part of their $95,000 RMD while keeping that income completely off their tax return. You'll also discover who qualifies for QCDs, which accounts work and which don't, and the critical year-end deadline that trips up donors every December when checks written in late December don't clear until January.

Most importantly, you'll get a simple six-step checklist for completing your QCD this year, learn whether donating appreciated stock or a QCD makes more sense for your situation, and understand the fine print rules that can disqualify your gift—like sending money to a donor advised fund or receiving benefits in return. If you're charitably inclined and want to support causes you care about while keeping more control over taxes and Medicare costs, this video shows you exactly how to do it.

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0:00 Introduction
0:46 What is a QCD and why it matters
2:02 Who can use QCDs and which accounts qualify
3:11 How to complete a QCD step by step
4:18 QCD example: Virginia couple saves on taxes and Medicare
5:19 Six-step checklist to complete your QCD
6:46 Donating stock vs. QCD: Which is better?
8:34 Fine print rules and common myths
10:02 Key takeaways and free resources


Disclosure: Covenant Wealth Advisors is a registered investment adviser. The information presented in this video is developed from sources believed to be providing accurate information and is for educational purposes only. This content should not be considered investment, tax, legal, or financial planning advice, nor a solicitation for the purchase or sale of any security. The information provided is not intended to be used for the purpose of avoiding federal tax penalties. Because we don't know your individual circumstances, this general information may not apply to your situation. Before making any financial decisions, consult with a qualified financial advisor, CPA, attorney, or other appropriate professional who can evaluate your specific needs. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results, and no investment strategy can guarantee a profit or protect against loss in periods of declining values. For more information about our firm, including our services and fees, please visit our website or review our Form ADV, available at adviserinfo.sec.gov.