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Old 10-12-2016, 07:14 AM   #21
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That's right. Not deductible, but the advantage to a QCD is that it won't add to your AGI. IRS Pub 590-B has the details
I'm wondering if there could be another potential advantage: reduce AGI via QCD and then take standard deduction, assuming that the standard deduction is now more than itemized deductions without the charitable contribution. Is this a valid thought?
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Old 10-12-2016, 07:18 AM   #22
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Old 10-12-2016, 07:32 AM   #23
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One other nice feature of the QCD if you have basis in your TIRA (non-deductible contributions)........the QCD comes out of the deductible contributions, thus saving your basis. Not written up in IRS pubs AFAIK but if you follow the instructions on F8606 carefully, you will do the right things tho not necessarily understanding the implication. Alan S. at fairmark.com pointed that out to me and if I think hard enough, it makes sense. You also have to be >= 70.5 at the time you make the QCD so not everything in the yr you turn 70.5 will count as QCD.
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Old 10-12-2016, 07:42 AM   #24
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All of the 401Ks that I am familiar with (just 3) will not only notify you of the amount of the RMD required but have a default that if you don't take it by sometime in December, they will send it to you automatically. They can do this because 401Ks cannot be aggregated.

IRAs which can be aggregated typically only send notification of the amount of the RMD . If they are smart they will not do the default distribution because you may have taken it from another IRA. 403b are similar to IRAs since they can be aggregated with other 403bs.
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Old 10-12-2016, 08:26 AM   #25
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Yes, it was good that Souschef brought up the charitable contribution direct from IRA info......

But I believe that if you do your charitable giving via direct transfer from your IRA, those contributions will no longer be deductible on your taxes. Sadly, you don't get it both ways....... For example, if you now give your alma mater $5K/YR and deduct that $5k on your taxes and switch to having $5k distributed to your alma mater directly from your IRA (reducing the RMD you must take) you don't get to also deduct the $5k from your taxes. So, keep that in mind too.
I am not aware of any cases where you can double-dip.......you can't use medical expenses to justify withdrawal from HSA and then deduct the very same expenses. But AFAIK the QCD is always better (or the same) as the deduction because 1) it reduces AGI and may reduce negative effects of AGI on credits and 2) as noted previously by another poster, your contribution may not be fully effective as a deduction if you don't exceed the standard deduction without it.
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Old 10-12-2016, 08:44 AM   #26
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Simple. It's one per year, starting in the year you turn 70.5. It's that simple in most cases.

I'll be 70 1/2 in April 2036 (God willing). So that will be the first year I am required to take an RMD. I don't have to take another one in 2036 even though I'd turn 71 later that year. One per year starting with the year in which you turn 70 1/2. That said, we will probably be taking distributions from it before then, but you never know.
Just noticed we were born in the same month and year. Are you still a Libra? (Zodiac Signs NASA Changes Horoscope Dates New Ophiuchus). Apparently I am now a Virgo.
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Old 10-12-2016, 09:57 AM   #27
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The standard deduction right now is over $15 K for MFJ over 65. We have no debt, so no interest deduction. property tax low, so there is no way I can hit that. The QCD is a perfect way to reduce your AGI.
The one caveat is that the check drawn on the institution must be made out to the charitable institution.
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Old 10-12-2016, 02:10 PM   #28
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Thanks to everyone for responses. My eyes glaze over at official "governmentese" and hearing things in other words helps.
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Old 10-14-2016, 01:30 PM   #29
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Another potential idea: use the QCD to lower income for purposes of the Social Security Benefits Worksheet, thus potentially lowering the amount of Social Security benefits that would be taxed.

I quickly checked last year's tax forms and it seems like it could work. Has anyone out there used this approach?
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Old 10-14-2016, 02:02 PM   #30
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The standard deduction right now is over $15 K for MFJ over 65. We have no debt, so no interest deduction. property tax low, so there is no way I can hit that. The QCD is a perfect way to reduce your AGI.
The one caveat is that the check drawn on the institution must be made out to the charitable institution.
Actually, the stretch to make 15k may not be as tough as you think. I was surprised to see how much medical insurance (medicare Plan B,Plan F and D premiums, out-of-pocket medical, dental, eye and misc add up. (yes, you do have to make an income test, so only deduct portion over 7.5% of income). Throw in some charitable deductions, state income or sales taxes and presto you are over 15K.
I had periodontal work and wife had implant one year that quickly pushed us o over the threshold.
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Old 10-14-2016, 03:02 PM   #31
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Another potential idea: use the QCD to lower income for purposes of the Social Security Benefits Worksheet, thus potentially lowering the amount of Social Security benefits that would be taxed.

I quickly checked last year's tax forms and it seems like it could work. Has anyone out there used this approach?
I tried doing that using Turbotax, but even increasing my QCD by 30K did not impact the SS amount. Of course. it did decrease by tax obligation.
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Old 10-14-2016, 03:12 PM   #32
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thanks, all, for the good info..will file away for when i actually start taking distributions in approx 4 yrs...of course rules may change somewhat by then, who knows.still expect there will continue to be advantages to making charitable contributions out of tax deferred accounts. Always good to gather info from this great community, and learn from those already in a position to do something that I am considering
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Old 11-02-2016, 07:50 PM   #33
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It looks like I've found another reason to do QCD next year -

Our state income tax is based on AGI with some adjustments that don't include deductions. So a charitable deduction doesn't affect the tax computation but a reduction to AGI via a QCD would result in a lower state income tax computation. Although QCD won't reduce our deductible expenses to below the standard deduction, this state tax gambit seems worth while doing.
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Old 11-02-2016, 09:00 PM   #34
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That's right. Not deductible, but the advantage to a QCD is that it won't add to your AGI. IRS Pub 590-B has the details.
You must also file Form 8606, Nondeductible IRAs, if:
you made the qualified charitable distribution from a traditional IRA in which you had basis and received a distribution from the IRA during the same year, other than the qualified charitable distribution; or
the qualified charitable distribution was made from a Roth IRA.
If you file F8606 because you had basis, be sure you read the instructions on the form itself and also the instructions for the form (separate) and follow them. When you do a QCD, it comes only from the deductible part of the IRA which preserves the basis for your other taxable distributions from the IRA.
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