Qualified Charitable Deduction 2014?

[sdfire]

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.

 

[gerntz]

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.

 

[meierlde]

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.

 

[LOL!]

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.

 

[kaneohe]

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.

 

[LOL!]

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. ?

 

[kaneohe]

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/Charitable-Donations-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.

 

[LOL!]

Ah, tricky! Thanks.