Key Takeaways
- An IRA owner 70½ or older can send money straight from the IRA to charity as a qualified charitable distribution, which counts toward that year’s required minimum distribution and stays off the tax return.
- A hypothetical single 74-year-old with $115,000 of income who gives her church $10,000 this way cuts her income to $105,000 and skips $2,200 of federal tax in the 22% bracket.
- The lower income also puts her under Medicare’s $109,000 surcharge line, worth $974.40 a year at 2026 rates, though that saving lands on her premiums two years later.
- The gift has to leave the IRA by Dec. 31, and her custodian has to send it directly to the church.
A hypothetical single 74-year-old gives her church $10,000 every year. She has a $500,000 IRA, $115,000 of income, and the habit of writing the gift as a check.
That habit costs her. If the same $10,000 went straight from her IRA to the church, she’d skip $2,200 of federal tax. She’d also drop below the income line where Medicare starts charging extra, which is worth $974.40 a year at 2026 rates.
The IRA can write the check
The IRS lets an IRA owner who’s at least 70½ send money directly to a charity as a qualified charitable distribution, or QCD. The IRS’s Publication 590-B says a QCD counts toward that year’s required minimum distribution, and the gift is tax-free, so it never lands on her return as income. In 2026, each IRA owner can give up to $111,000 this way, so a $10,000 gift is nowhere near the cap.
Her RMD sets the stakes. The IRS divides an IRA’s balance at the end of 2025 by the Uniform Lifetime Table’s figure for the owner’s age this year, which is 25.5 at 74. On $500,000, that’s $19,608 she has to take out by Dec. 31. A $10,000 QCD covers more than half of it, and she takes the other $9,608 the usual way.
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Same gift, $10,000 less income
Here’s her 2026 return both ways, with the $16,100 standard deduction for single filers:
| Metric | Gift by check | Gift by QCD |
|---|---|---|
| Income on her return | $115,000 | $105,000 |
| Taxable income after the $16,100 standard deduction | $98,900 | $88,900 |
| Part B surcharge at 2026 rates, for the year | $974.40 | $0 |
Both taxable figures sit inside the 22% bracket, which runs from $50,400 to $105,700 for a single filer in 2026, according to the IRS’s release on its 2026 inflation adjustments. The $6,000 senior deduction for filers 65 and older shrinks at her income, but it can’t push either figure below $50,400. So every dollar of the $10,000 she keeps off her return would have been taxed at 22%, or $2,200 in all.
A check wins back very little of that. Unless her other deductions top $6,100, the $10,000 gift doesn’t get her past the standard deduction, so she wouldn’t itemize. Starting in 2026, non-itemizers can deduct up to $1,000 of gifts, and that deduction is worth $220 to her at 22%.
The Medicare line at $109,000
Medicare sets its Part B surcharge from the income on the tax return two years before. At CMS’s 2026 rates, a single person with more than $109,000 and up to $137,000 pays an extra $81.20 a month.
At $115,000, she’s $6,000 over that line. At $105,000, she’s $4,000 under it. Twelve months at $81.20 is $974.40. Add the $2,200 of tax, and the gift saves her $3,174.40. If she also has Part D drug coverage, which carries its own income surcharge, she saves more than that.
The catch is timing. Her 2026 return sets her 2028 premiums, and CMS hasn’t published 2028’s bands. If the line rises past $115,000 by then, she clears it either way, and that part of the saving goes away. If it stays near $109,000, the QCD keeps her under it.
Get it done before December gets busy
The QCD has three requirements:
- The money goes directly from the IRA to the church, sent by her custodian.
- The transfer has to be completed by Dec. 31. Ed Slott, a New York CPA and IRA specialist, told Yahoo Finance to finish these by the first week of December. In the year’s last two weeks, custodians are flooded with QCD and RMD requests.
- Her 1099 won’t show that the money went to charity, so she has to tell her tax preparer to leave it out of her taxable income.
It pays every year she gives
The $2,200 comes back every year she gives this way and stays in the 22% bracket. The Medicare part repeats too. Each year’s QCD keeps that year’s income $10,000 lower, and Medicare looks at that income two years later.
Medicare’s surcharge notices go out this November and December with Social Security’s cost-of-living letters. They’re based on 2025 returns. Whatever she sends to the church from her IRA by Dec. 31 shows up two years from now.
For anyone over 70½ who gives anyway and doesn’t need the whole RMD to live on, writing a check is the expensive way to give. The figure that could change that is CMS’s 2028 surcharge line, whenever it’s published.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
