If you have already filed your 2025 tax return, start thinking NOW about 2026. A vexing thought, right? But planning ahead can allow you to support causes you care about. It’s a fulfilling and selfless act that can make a significant impact on the lives of those in need. It also can be a beneficial way to reduce your tax liabilities. One charitable giving method is through qualified charitable distributions (QCDs). And a great local cause is the SBCO Scholarship Endowment Fund. The Fund was designed to ensure that future local high school graduates will be able to receive scholarships, helping them to break the cycle of generational poverty
Qualified charitable distributions (QCDs) were introduced as a way to encourage charitable giving from individuals with IRAs. The distribution must meet certain criteria. To start, it must be made from an IRA, including traditional, rollover, and inherited IRAs, but not from a Simplified Employee Pension (SEP) or a Simple IRA. Next, the distribution must be made directly to a qualified charity. Finally, the donor must be at least 70 ½ years old at the time of the distribution.
QCDs are particularly beneficial for donors who have reached the age of 73 and have a traditional IRA. At this age, it is mandatory to take required minimum distributions (RMDs) from their traditional IRA, creating taxable income. However, QCDs can be used to satisfy the RMDs and provide tax benefits by directing the distribution to a charity.
Since the minimum donation level for the SBCO Scholarship Endowment Fund is $5,000 (an amount set to ensure smaller donations were directed to the SBCO general fund), many donors have found a QCD is a perfect way to satisfy the donation minimum while also lowering their tax liability.
Communicating with your IRA custodian is important to make certain they understand your intent. There may be additional processing time, so it is important to notify them well in advance. Also, for reporting on your tax return detailed records are needed, including the amount of the distribution, the date it was made, and the charity.
In general, QCDs are a simple and tax-efficient way to support the causes you care about while lessening your tax burden. If you plan on making a charitable contribution and are eligible, consider making a qualified charitable distribution.
All contributions to the SBCO Scholarship Endowment Fund must be made payable to the Community Foundation for Southern Arizona (CFSA) and designated for SBCO Endowment. (CFSA’s Tax ID is 94-2681765.)
Donations should be sent to:
Community Foundation for Southern Arizona
SBCO Scholarship Endowment Fund
5049 E. Broadway, Suite 201
Tucson, AZ 85711
