Charitable IRA Gifts

How it works

This provision allows retirees ages 70 1/2 and older to donate up to $100,000 tax free from their IRA each year. Generally, when you take a distribution from your IRA, it is treated as taxable income. Under this provision, made permanent in the 2015 federal spending and tax package, those assets are excluded from income if the distribution is made directly to charity.

The distribution is not included in your income so you avoid the potential negative consequences that regular IRA withdrawals in retirement can create, including taxes on Social Security benefits. Distributions excluded from income are also equivalent to a 100% deduction.

Normally, charitable contribution deductions are limited to a lower percentage (or are limited altogether) for taxpayers who do not itemize and take the standard deduction.

Turn your required distributions into charitable donations

IRS rules mandate that individuals 70 1/2 and older take RMDs from their IRA each year, regardless of whether the income is needed. These annual withdrawals are subject to ordinary income taxes. By making a charitable contribution from your IRA, you can satisfy your RMD amount without reporting additional income.

This provision may be especially attractive for retirees who don't need all the income from their IRA to meet current living expenses. By donating the money to charity, you can enjoy the satisfaction of knowing that you are contributing to a worthy cause while effectively lowering your tax bill.

You should talk with your financial representative or tax advisor before making a decision that alters your tax situation.

We'd love to help

Please contact us any time at outreach@guidedogsoftexas.org!