{"id":14205,"date":"2019-11-15T14:29:49","date_gmt":"2019-11-16T02:29:49","guid":{"rendered":"https:\/\/sfwpartnersllc.com\/?p=14205"},"modified":"2019-11-15T14:29:49","modified_gmt":"2019-11-16T02:29:49","slug":"ira-charitable-donations-are-an-alternative-to-taxable-required-distributions","status":"publish","type":"post","link":"https:\/\/www.sfw.cpa\/news-and-guides\/ira-charitable-donations-are-an-alternative-to-taxable-required-distributions\/","title":{"rendered":"IRA Charitable Donations are an Alternative to Taxable Required Distributions"},"content":{"rendered":"

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Are you charitably minded and have a significant amount of money in an IRA? If you\u2019re age 70\u00bd or older, and don\u2019t need the money from required minimum distributions, you may benefit by giving these amounts to charity.<\/p>\n

IRA distribution basics<\/strong><\/p>\n

A popular way to transfer IRA assets to charity is through a tax provision that allows IRA owners who are 70\u00bd or older to give up to $100,000 per year of their IRA distributions to charity. These distributions are called qualified charitable distributions, or QCDs. The money given to charity counts toward the donor\u2019s required minimum distributions (RMDs), but doesn\u2019t increase the donor\u2019s adjusted gross income or generate a tax bill.<\/p>\n

So while QCDs are exempt from federal income taxes, other traditional IRA distributions are taxable (either wholly or partially depending on whether you\u2019ve made any nondeductible contributions over the years).<\/p>\n

Unlike regular charitable donations, QCDs can\u2019t be claimed as itemized deductions.<\/p>\n

Keeping the donation out of your AGI may be important because doing so can:<\/p>\n

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  1. Help the donor qualify for other tax breaks (for example, a lower AGI can reduce the threshold for deducting medical expenses, which are only deductible to the extent they exceed 10% of AGI);<\/li>\n
  2. Reduce taxes on your Social Security benefits; and<\/li>\n
  3. Help you avoid a high-income surcharge for Medicare Part B and Part D premiums, (which kicks in if AGI hits certain levels).<\/li>\n<\/ol>\n

    In addition, keep in mind that charitable contributions don\u2019t yield a tax benefit for those individuals who no longer itemize their deductions (because of the larger standard deduction under the Tax Cuts and Jobs Act). So those who are age 70\u00bd or older and are receiving RMDs from IRAs may gain a tax advantage by making annual charitable contributions via a QCD from an IRA. This charitable contribution will reduce RMDs by a commensurate amount, and the amount of the reduction will be tax-free.<\/p>\n

    Annual limit<\/strong><\/p>\n

    There\u2019s a $100,000 limit on total QCDs for any one year. But if you and your spouse both have IRAs set up in your respective names, each of you is entitled to a separate $100,000 annual QCD limit, for a combined total of $200,000.<\/p>\n

    Plan ahead<\/strong><\/p>\n

    The QCD strategy can be a smart tax move for high-net-worth individuals over 70\u00bd years old. If you\u2019re interested in this opportunity, don\u2019t wait until year end to act. Contact us for more information.<\/p>\n

    \u00a9 2019 <\/em><\/p>\n

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    \n<\/html><\/p>\n","protected":false},"excerpt":{"rendered":"

    Are you charitably minded and have a significant amount of money in an IRA? If you\u2019re age 70\u00bd or older, and don\u2019t need the money from required minimum distributions, you may benefit by giving these amounts to charity. IRA distribution basics A popular way to transfer IRA assets to charity is through a tax provision […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-14205","post","type-post","status-publish","format-standard","hentry","category-individual-tax"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=14205"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/14205\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=14205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=14205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=14205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}