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How to Lower Your Tax Bracket AND take your (RMDs) Required Minimum Distribution


Post by Richard Bell, Partner, Senior Financial Planner

Each year around tax season, the question arises for financial planners and accountants alike: how can I lower my tax bracket? Once you reach age 72, things get even more complicated. That’s the year when Required Minimum Distributions from IRAs begin. In other words, age 72 is the year when you have to start pulling a minimum amount out of your individual retirement accounts, regardless of whether you’re still working. This amount can affect your AGI (adjusted gross income) for the year, potentially propelling you into an even higher tax bracket and meaning you may owe more.

Luckily, as with most life events, there’s a plan for that!

Do you give to charities?  Have you ever heard of the term Qualified Charitable Distribution? A QCD is a donation to a charity that counts as an above the line deduction on your taxes, meaning it can lower your AGI and potentially keep you at a lower bracket for the year. And because this is an above the line deduction, you can also still take advantage of the Standard Deduction.

How does a QCD work?

The maximum amount you can donate for the year as part of a QCD is $100,000 for a Single Filer. If you are Married Filing Jointly, you and your spouse can each exclude the full $100,000 amount from your AGI, as long as the QCDs are taken from separate IRAs.

The donation must go to a 501 (c)(3) organization.

The check must be issued directly from your IRA to the charity. It cannot be issued to you, and then provided by you to the charity.

What Documents Will I Need for My Accountant?

Make sure to keep copies of the checks involved in issuing the QCD, as well as a letter from the charity proving the donation amount. You will also receive a 1099.

Also make sure that your accountant knows that the donation amount was sent directly from your IRA!

Should I Consider a QCD?

Of course, every financial situation is different, so ultimately be sure to talk to an advisor or your accountant before moving forward on any tax planning strategy.

However, a QCD can help you to:

  1.       Lower your AGI.
  2.       Lower your IRA balance so that you may face lower RMDs in future.
  3.       Make a larger donation to charity than you otherwise might have been able to in cash!


Mark P. Cussen, “How to Reduce Your Taxes and AGI by Giving to Charity”, Investopedia, May 8, 2022

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