Qualified Charitable Question

[rk911]

I'm sure this is easy...

So I was reading Kiplinger's about charitable donations.

They say: "...In 2024 you can transfer up to $105,000 from your IRA to qualified charities. The contribution is not deductible but it will reduce your AGI...."

Can someone explain how "not deductible" reduces the AGI?

IF your IRA withdrawl is given to charity via a QCD (Qualified Charitable Deduction) the amount withdrawn is not added to your AGI but also not decuctible as a charitable donation.

But if you donate directly to a charity the amount donated may be deductible as a charitable donation but the full amount withdrawn will be included in your AGI.

We choose QCD. Seems like a no-brainer if you plan on donating from an IRA.

 

[marko]

I'm sure this is easy...

So I was reading Kiplinger's about charitable donations.

They say: "...In 2024 you can transfer up to $105,000 from your IRA to qualified charities. The contribution is not deductible but it will reduce your AGI...."

So Kiplinger's statement above is incorrect, or incomplete at best. It should say that it would only reduce your AGI if you were otherwise planning to donate via withdrawing funds and then taking the deduction. Yes?

 

[braumeister]

So Kiplinger's statement above is incorrect, or incomplete at best. It should say that it would only reduce your AGI if you were otherwise planning to donate via withdrawing funds and then taking the deduction. Yes?

Yes.

 

[OnwardAndUpward]

I'm sure this is easy...

So I was reading Kiplinger's about charitable donations.

They say: "...In 2024 you can transfer up to $105,000 from your IRA to qualified charities. The contribution is not deductible but it will reduce your AGI...."

Can someone explain how "not deductible" reduces the AGI?

The donation counts toward your Required Minimum Distribution (RMD) but is not taxable income.

 

[gauss]

So Kiplinger's statement above is incorrect, or incomplete at best. It should say that it would only reduce your AGI if you were otherwise planning to donate via withdrawing funds and then taking the deduction. Yes?

You aren't allowed to list it as an itemized deduction on Schedule A Charity. This is because the distribution has already been removed from your AGI.

I think that is what Kipplinger's is trying to convey.

FWIW There is no double dipping allowed in most cases of tax law.

-gauss

 

[HaveEnough]

Hmmm, this is a great opportunity to bring in a different option for some creative folk.

You can start a Charitable foundation that YOU and your FAMILY run. You can transfer from your IRA to your foundation without tax, reduce your future RMD, receive NO tax deduction. With a foundation, you have to pay out 5% to a charity of your choice. This includes the foundations expenses. Next level, you offer matching contributions. Someone donates a kilobuck to the foundation and you donate some greater than one multiple of their funds to the charity.

Any one want to start a foundation?

 

[audreyh1]

Not really.

 

[OldShooter]

... Any one want to start a foundation?

Filling out IRS forms is not a task that I would ever seek out. We already have standard deductibility, QCDs, and DAFs. That's enough for me.

 

[imnontrad]

It is transferred directly from your pre-tax IRA to the qualified charity. Because of this, the amount is not part of your AGI (no income taxes due) and you do not get a charitable deduction to reduce your taxes (further).
Otherwise, let's say you are in the 22% tax bracket. You withdrew 10,000 from your pre-tax account and donated the $10,000 to a charity but, the income taxes on that withdrawal may cost you an additional $2,200, especially if your total deductions for the year are less than the standard deduction.
By doing a QCD (after age 70 1/2 only), you do not have the tax AND after you reach the age RMDs are required, this can satisfy all/part of your RMD also.

 

[jebmke]

I'd have to look at the regs but doing a transfer from an IRA to a private foundation would be considered a distribution (taxable). QCDs cannot be made to DAFs or private foundations.

 

[Koolau]

All in, QCD's are a good deal. I need to convert some 401(k) money to tIRAs so I can do QCD charity giving.

 

[TheWizard]

All in, QCD's are a good deal. I need to convert some 401(k) money to tIRAs so I can do QCD charity giving.

Similar to me, from 403(b)...