Qualified Charitable Distributions

‍Qualified Charitable Distributions:

Year end is fast approaching and tax planning is most likely on everyone’s minds for 2019.  Under the 2018 Tax Cuts and Jobs Act, the standard deduction increased significantly resulting in many taxpayers not being able to itemize their deductions. If you are one of these taxpayers and are charitably inclined, subject to required minimum distributions (RMD) from your Individual Retirement Account(IRA) and wish to obtain a tax benefit for your charitable donation, there is aprovision in the tax law you might be able to take advantage of.  You can designate all or a portion of your RMD as a qualified charitable distribution (QCD) to an organization eligible toreceive tax deductible contributions from your IRA (other than a SEP or SIMPLE IRA).  The distribution is generally a non-taxable distribution and must be made directly by the trustee of your IRA to the charity.  The QCD will count toward your required minimum distribution.  The maximum annual exclusion for QCDs is $100,000. If your IRA has basis (nondeductible contributions in past years) then the distribution is first considered to be paid out of otherwise taxable income.  

Consider using QCDs out of your IRA before year end since you could benefit (income generally will not be taxable to you) and the charity benefits with a donation.  Make sure to obtain an acknowledgment from the charity for tax purposes.  Estuary Council of Seniors, Inc. is a 501c(3) organization eligible to receive tax deductible contributions.  Consult with your tax advisor well in advance of year end if you are thinking of doing a QCD from your IRA for 2019.  

 by Mark White CPA, Controller for Estuary Council of Seniors, Inc.

Estuary Council of Seniors, Inc. and their employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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