It is true, it is better to give than to receive.

However, many Americans are experiencing less joy when giving this year. The income-tax benefit they used to receive from their charitable giving now applies to fewer of them. How come? Because the tax reform that Congress passed in 2017 raised the standard deduction, eliminating the need to itemize for millions of Americans.

One of the more popular itemized deductions, of course, has been the amount you gave to your church or your favorite charity.

For 2019, the standard deduction has jumped to $12,200 for individuals and $24,400 for married couples filing jointly. That is nearly double what it was before tax reform came about. So, unless you have a list of deductions exceeding those amounts, there’s no reason to itemize.

So long, charitable deduction – and the tax benefit that came with being generous.

However, for some people, there is still an alternative way to reduce your taxes through charitable giving that’s unrelated to deductions.

If you have an IRA and are over 70 ½ – the age when the federal government starts requiring you to take a minimal amount out of your tax-deferred accounts each year – you may want to consider a Qualified Charitable Distribution (QCD).

The QCD allows you to satisfy your Required Minimum Distribution (RMD) by giving to your beloved local charity and/or tithing to your church. If the entity is a 501(c)(3) organization you can give directly from your IRA without paying any taxes on this withdrawal, and it won’t show up as a part of your adjusted-gross income on your tax return.

Sadly, countless Americans are missing out on this opportunity. They take their RMDs and deposit these funds into their savings accounts, then throughout the year give those same dollars to their church without enjoying the tax savings they could have had. For example, let’s say we have a client who is required to take a $5,000 distribution this year and pays 15% in taxes on this distribution. Later, that client decides to give that money to charity. That means the client lost $750 to Uncle Sam that could have been saved if they had a QCD.

The essentials to remember with QCDs:

• You must be 70 ½ or older
• QCDs will satisfy your RMDs
• QCDs are limited to $100,000 per year for an individual; a couple filing jointly can qualify for $100,000 each.
• Any remaining balance of your RMD will still need to be paid out to you.
• The QCD must be facilitated by the trustee of your IRA (except with an ongoing SEP or SIMPLE IRA). QCD’s will be recorded on your 1040 form as an IRA distribution but will remain nontaxable.
• 401(k)s, 403(b)s, thrift savings plans and other qualified plans do not qualify for QCDs. It must be an IRA.

I encourage you to work with a financial professional who is familiar with QCDs as well as IRA Exit Strategies. IRA Exit strategies, in conjunction with QCDs, can help lower your current tax burden while helping to reduce the risk of future tax increases by transitioning your IRA to tax-free accounts like Roth IRAs. Remember, QCDs must be facilitated and distributed directly by the custodian or trustee of your IRA. These transactions should be handled carefully and should be discussed in union with other topics with your CPA.

As you decide on how to distribute your RMD this year, remember that a QCD is a great way to satisfy your RMD requirement and in the process receive a nice tax break for your generosity. This year don’t just give; instead give and receive.

Andrew McNair is the president of SWAN Capital, an independent financial services firm in Pensacola, Florida.