QCDs and State Tax Credits | Ed Slott and Company, LLC

QCDs and State Tax Credits

Based on my understanding of the IRS Regulations issued in June, an individual cannot use a QCD to make a charitable contribution and then obtain a state tax credit for that charitable contribution (unless the credit is less than 15% of the contribution). Is that correct?

That is what I am reading, and the entire combination of treatments is now a quagmire. If the premise is that the IRA distribution qualifies and is treated as a QCD on the federal return, and if the corresponding state charitable tax credit is greater than 15% of the donation, in order to preserve the QCD treatment on the federal return, the taxpayer must reduce the state credit claimed down to 15% of the donation. 

 

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