Valentine’s Day usually conjures up images of chocolate hearts and long-stemmed roses. But in 2026, we’re seeing a shift toward "intentional giving"—spreading love that leaves a lasting legacy.
If you are looking for a way to support the causes you love while being incredibly smart with your tax strategy, let us introduce you to a truly romantic financial tool: the Qualified Charitable Distribution (QCD).
What is a QCD?
Think of a QCD as a direct "love note" from your IRA to your favorite charity. For those aged 70 ½ or older, it allows you to transfer funds directly from your IRA to a qualified 501(c)(3) organization.
The magic? The money never hits your bank account, which means it never counts as taxable income. It’s a clean, efficient way to give that bypasses the IRS entirely.
Why It’s a Valentine’s Match Made in Heaven
- Cupid’s Arrow for Your RMD: If you are 73 or older, you’re likely facing Required Minimum Distributions (RMDs). A QCD counts toward your RMD for the year. It’s a win-win: you satisfy the government's requirements while fueling a cause you're passionate about.
- A "Sweet" Tax Break: By excluding the donation from your Adjusted Gross Income (AGI), you might stay in a lower tax bracket. This can also help minimize the impact on your Social Security taxation or Medicare premiums (IRMAA).
- The 2026 Limit: Thanks to inflation indexing that began a few years ago, the power of the QCD has grown! For 2026, the annual limit has increased beyond the old $100,000 cap.
- 2026 Update: Individuals can now gift up to $112,000 per year via QCDs. For a married couple, that’s a potential $224,000 impact!
- Simplified Romance: No need to worry about itemizing deductions on your tax return to see a benefit. Even if you take the standard deduction, the QCD provides a tax advantage.
📝 A Note for Your "Financial Wingman" (Your CPA)
While the QCD is simple, the paperwork can be shy. When you receive your Form 1099-R next year, it usually won't specify that the distribution was a QCD. *Note: Look on your 2025 1099-R for Code Y, Box 7, if you did a QCD in 2025. If the 1099-R is not coded as a QCD, use our Pro Tip below.
Pro Tip: Keep your receipts and explicitly tell your CPA or tax professional that you made a QCD. They need that verbal and written confirmation to ensure it’s reported correctly on your Form 1040 so you don't pay taxes on that gift!
Beyond the Box of Chocolates
Generosity doesn't have to be a one-day event. Whether you’re passionate about local animal shelters, environmental conservation, or supporting your church or temple, a QCD allows you to be a hero for your community all year long.
Ready to Share the Love?
Don't let your RMDs create a tax headache. Talk to us at DFG about incorporating QCDs into your 2026 gifting strategy. We can help you navigate the logistics so you can focus on the joy of giving.
This Valentine’s Day, choose a gift that keeps on giving: the gift of impact and a brighter financial future.
Happy Valentine’s Day and Happy Giving!
David, Jacob, & Tami
Disclaimer: Consult your financial advisor to discuss your specific situation. The advisors at Dixon Financial Group, LLC are not tax professionals; please consult a CPA or Tax Professional to discuss the specific impact a QCD could have on your tax return.