Now that we have all lived through one tax filing season under the new tax law changes, it’s time to one again reemphasize the effectiveness of utilizing your IRA distributions as the preferred vehicle to make your 2019 charitable contributions. The dramatic increase in the standard deduction likely lessened the number of taxpayers who were able to itemize their deductions – which included their charitable contributions.
The “qualified charitable distribution” enables a taxpayer that is age 70 ½ or older that is receiving IRA distributions to direct all or a portion of those distributions to a charity such as St. Ann Church. The beauty of the “qualified charitable distribution” is that it satisfies your IRS obligation to take your required IRA distribution, but at the same time excludes those dollars from your taxable income for both federal and state purposes. Thus, achieving an even better tax answer than the previous itemized deduction opportunity for donations
by saving federal and state taxes.
If you were surprised that you were unable to itemize for 2018, please consider the “qualified charitable distribution” as a possible solution to achieving tax savings in 2019. As with most all tax planning options, there are some specific rules that need to be followed, so please touch base with your tax or investment advisor to ensure proper compliance and tax benefits.