Are you 70 ½ or older and have a Traditional, Rollover, or inherited IRA, or other qualified retirement plan?
Do you donate to qualified charities, but find that you can no longer receive a tax benefit on your tax return because you must use the standard deduction?
Hello, my name is Patti Palmich. I am a Sr. Tax Accountant at Killingsworth Spencer CPAs. If you answered “yes” to these questions, then a Qualified Charitable Distribution (QCD) could help you reduce your taxable income while donating to your favorite charity.
QCDs are distributions made from your eligible tax-deferred retirement plan directly to a qualified 501 (c) (3) charity. Because QCDs are a tax-free donation, the amount will not be included in your taxable income on your tax return for the year. What’s more, if you are taking the required minimum distribution, QCD counts towards fulfilling your RMD for the year.
Here is an example:
$30,000 RMD payment
($30,000) (direct) charitable contributions
$0 Taxable income on your RMD
If you are over 70 ½ years old, you may make up to a $108,000 donation to a qualified charity if you are single, and up to $216,000 if you are married. As with most tax matters, there are other issues to consider, such as maximum gifts each year and specific procedures that must be followed. Killingsworth Spencer CPAs recommends that you discuss your plans with your accountant and financial advisor well in advance, rather than waiting until the last minute. It can be especially helpful to sit down with your CPA and run through some financial scenarios to maximize the tax deduction.
If you have any questions or you would like to learn more about how Killingsworth Spencer CPAs can help you reach your tax goals, give Lynn Spencer a call at 770-552-8286. Or you can visit our website at www.killingsworthspencerllc.com
Disclaimer: This post is for general information only and should not be taken as legal or financial advice.