Donating from IRA for 70+ with Tax Break

[tapahelp]

A no-brainer tax break — if you’re old enough and have a traditional IRA
People who take the standard deduction generally get no tax benefit from their charitable contributions. But if they’re older than 70½ and donate directly from their IRA, the amount transferred won’t be added to their income and taxed, like it would be if they took money out of a regular (not Roth) IRA themselves.

More at:
https://www.sfchronicle.com/busines...r-tax-break-if-you-re-old-enough-13465632.php

 

[gauss]

Yep,

Note
#1) It is often referred to as a (QCD) Qualified Charitable Deduction, so make sure you understand the rules on this.

#2) The donation needs to be made directly from the financial institution (as a QCD) to a 'qualified' charity.

#3) Donor Advised Funds (DAF) are specifically NOT allowed to receive QCD donations!

#4) QCDs can also satisfy your yearly RMD withdrawal requirement once this starts at age 70 1/2.

-gauss

 

[Golden sunsets]

Just went through this method of giving for the first time. Worked well but don't wait until the last minute to set up the donations. There is a bit of paperwork.


Sent from my iPad using Early Retirement Forum

 

[kaneohe]

............................

#4) QCDs can also satisfy your yearly RMD withdrawal requirement once this starts at age 70 1/2.

-gauss

just for repetition...........The QCD must be made after age 70.5.
In the yr you turn 70.5 any withdrawal could be considered an RMD.
However only withdrawals after age 70.5 can be QCDs. Preferably
you take the QCDs before you finish taking your RMDs to minimize withdrawals from the IRA.

Ex: RMD required is 10K QCD taken is 10K. Your first withdrawal is your QCD (after 70.5). You have satisfied your RMD with your QCD and withdrawn 10K.

You take your 10K RMD early in the yr. Later that yr you take your 10K QCD. You still get the benefit of the QCD but have withdrawn 20K from IRA.

You can also mix the order. If RMD is 20K. You can take 5K RMD,then 10K QCD, and then finish up w/ 5K RMD.

You are responsible for getting the tax benefit. The 1099-R document does not indicate the QCD. You must keep records showing the checks from the IRA written directly to the charity (but often sent to you to forward on) and receipts from the charity. If you use tax software, you need to tell it about the QCD and be sure that QCD code is on your tax return.