Would You Like Your Receipt with You or in the Bag? — Qualified Charitable Distribution Receipt Requirements
We are asked almost daily about receipts. It could be if we want a printed receipt at the gas pump, a receipt with us or in the bag at the grocery store, or a note on our computer screen that a receipt will be emailed to us after an online purchase. Regardless of how we get receipts and for what, just based on how often we encounter receipts, they seem important – in some instances more than others.
Regarding charitable donations, there are receipt rules. These rules are established by the Internal Revenue Service (IRS) and apply substantiation requirements for donors wanting to receive tax benefits for their charitable contributions. Most donors and professional advisors are accustomed to the receipt requirement for cash donations as it relates to applying for a charitable income tax deduction.
But what about qualified charitable distributions (QCDs)?
Even though most qualified charitable distributions are delivered to charitable organizations in the form of a check, which can easily and often be thought of as a cash donation, these contributions are treated differently by the IRS and within their substantiation rules.
To understand the receipt rules for these special gifts, it is important to understand how these gifts work. A qualified charitable distribution (QCD) is a special gift opportunity for donors 70½ years of age and older. With a qualified charitable distribution, a donor can give any amount (up to a collective maximum of $108,000 in 2025) from their Individual Retirement Account (IRA) directly to a qualified charity(s) without paying income taxes on the money. It is a powerful form of generosity that serves both the donor and the organizations they support.
So, what is the same and what is different between a qualified charitable distribution acknowledgment and a cash donation receipt?
| Qualified Charitable Distribution | Cash Donation |
|---|---|
| State donor’s name | State donor’s name |
| Includes date of the gift | Includes date of the gift |
| Includes amount of gift | Includes amount of gift |
| States no goods or services provided | States no goods or services provided |
| Not tax-deductible | Tax-deductible to the fullest extent of the law |
| Includes name of the IRA account custodian | Not applicable |
| Must state the contribution came directly from the IRA custodian | Not applicable |
| States that the intention of the transfer is for the gift to qualify as a Qualified Charitable Distribution | Not applicable |
These differences might not seem drastic, but the IRS lays the responsibility of obtaining a written acknowledgment on the individual taxpayer (donor) not the charitable organization. Failure to have all necessary elements on a qualified charitable distribution receipt may result in your client being taxed on the donation.
When advising your clients to make a qualified charitable distribution, especially if it is their first time making a transfer to a charitable organization, urge them to pay attention to the acknowledgment they receive. If they do not automatically receive an acknowledgment from the organization, advise them to reach out promptly and request one prior to the hustle and bustle of tax season. Donors are often shocked to find out that IRA custodians don’t always include the donor’s name and contact information along with qualified charitable distribution checks. Sometimes only a name, ‘John Smith,’ or just the donor’s city and state, ‘John Smith – Chicago, IL,’ is indicated in the custodian’s communication. When this occurs, it makes it almost impossible for a charitable organization to provide proper donor receipts.
In a world where receipts track most of our activities, it is important to share with your clients which ones are important for their tax preparations, and which ones can just be thrown in the bag.
About the Author
Pamela Leonard, CAP®, CFRE, CGPP
National Executive Lead, Charitable Estate Planning
American Heart Association
Pamela Leonard is a distinguished leader in nonprofit management and charitable estate planning, with dual degrees in Management of Nonprofit Organizations and Communications from Salem University. As a Certified Fund Raising Executive, Certified Gift Planning Professional and a Chartered Advisor in Philanthropy, she has continuously demonstrated her expertise in fundraising and estate planning. Her 18-year tenure at the American Heart Association, including over a decade as National Executive Lead for Charitable Estate Planning, highlights her expertise in deferred giving, asset management and leadership. Pamela’s dedication and impact have solidified her reputation as a visionary in philanthropy.
