Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Qualified Charitable Deduction 2014?
Old 11-17-2014, 08:31 PM   #1
Dryer sheet aficionado
 
Join Date: Jul 2009
Posts: 30
Qualified Charitable Deduction 2014?

I am helping my mother with her Required Minimum Distributions. Last year, she made some charitable contributions with a portion of her RMD. I know that congress hasn't extended that deduction, yet.

I am wondering if it is still worth it to have a portion of her RMD sent to a charity directly? If Congress later extends the deduction, she is in business. If Congress never extends the deduction, she is out a tiny amount of time spent to ask for the RMD to be sent to the charity. She is planning to make the charitable contribution regardless. So, the only question is whether it is worth the hassle to send it directly.

I am leaning toward suggesting that she go ahead and send the RMD to the charity even without the tax deduction extension. Does this make sense? Am I missing something? Thanks.
__________________

__________________
sdfire is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-17-2014, 08:42 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 1,552
She can add the charitable amount to the RMD amount distributed and turn around and write checks to the charities, and assuming she itemizes deductions, the net is she took out her RMD and the donations were tax-free.
__________________

__________________
gerntz is offline   Reply With Quote
Old 11-17-2014, 08:48 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,707
Quote:
Originally Posted by gerntz View Post
She can add the charitable amount to the RMD amount distributed and turn around and write checks to the charities, and assuming she itemizes deductions, the net is she took out her RMD and the donations were tax-free.
The only difference is that the RMDs count towards the taxation of Social Security and potential increase of Medicare part B premiums, since they do go in the AGI.
__________________
meierlde is offline   Reply With Quote
Old 11-17-2014, 09:10 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
In the past, the FIRST withdrawal from the IRA had to be the QCD. Don't know what the story will be if this is re-instated.
__________________
LOL! is offline   Reply With Quote
Old 11-17-2014, 09:54 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Quote:
Originally Posted by LOL! View Post
In the past, the FIRST withdrawal from the IRA had to be the QCD. Don't know what the story will be if this is re-instated.
LOL............originally that was my understanding too. Since then I have realized that it was my "misunderstanding" and that the QCDs need to be part of the initial withdrawals that constitute the RMDs but they don't have to be the absolute first......................if you want to withdraw only the RMDs. If you don't care about withdrawing more than the RMD, you could withdraw the RMD first and then the QCDs later.................of course, then you would be withdrawing more than necessary.
__________________
kaneohe is offline   Reply With Quote
Old 11-18-2014, 07:14 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
I think I got it. How about: If you want the QCD to double as the RMD or count towards the RMD, then it has to be the first withdrawal. ?
__________________
LOL! is offline   Reply With Quote
Old 11-18-2014, 07:43 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Quote:
Originally Posted by LOL! View Post
I think I got it. How about: If you want the QCD to double as the RMD or count towards the RMD, then it has to be the first withdrawal. ?
Almost.........but please double check . Again, that's what I first thought but
my impression now is that........maybe an example is simpler to explain.
Suppose RMD is 10K. I want to do a 6 K QCD.
1) I can take that 6K first and then a 4K distribution to me.
2)Or a I take a 4K distribution to me and then the 6K QCD
3)Or a 2K distribution to me, then the 6K QCD, then another 2K distribution to me.etc

In all cases, the 6K QCD is contained within the 10K RMD so I only take out 10K.

I could also be absent-minded and take the 10K RMD first, then remember the 6K QCD later but in this case, I will have taken 16K out which is less optimal.
The QCD still counts..........that is, it is not reflected in your AGI and does not get deducted.

An interesting tidbit I learned about QCD.......if you have basis in your IRA from non-deductible contributions................when you do a QCD, it skims all of that from deductible contributions which would eventually be taxed so you don't waste any non-taxable basis on the QCD.

http://www.irs.gov/Retirement-Plans/...ions-from-IRAs
The only important things here seem to be the age 70.5min. and the 100K QCD max.
Don't see anything about timing being first distribution,etc.
__________________
kaneohe is offline   Reply With Quote
Old 11-18-2014, 08:31 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
Ah, tricky! Thanks.
__________________

__________________
LOL! is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Mortgage Interest Deduction vs Standard Tax Deduction Question denefi FIRE and Money 16 11-14-2013 08:34 PM
Standard Deduction Equals Itemized Deduction? scrabbler1 Other topics 6 02-22-2012 09:09 AM
Charitable Remainder Trusts/Charitable Gift Annuities friar1610 FIRE and Money 4 10-12-2010 12:40 AM
maternity & HSA qualified plans stargazer08 Health and Early Retirement 8 10-20-2007 04:31 PM
All my greenback are in qualified plans Rich_by_the_Bay FIRE and Money 14 10-08-2006 11:44 AM

 

 
All times are GMT -6. The time now is 09:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.