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Donating IRA Required Minimum Distributions (RMDS)IRA owners who are 70 ½ or older can give money to charities directly from their IRA and not have it counted as income on their tax return. This is called a Qualified Charitable Distribution, or QCD. The giver does not pay tax on the distribution, so the charity gets the full distribution amount. This strategy is particularly useful for those who are subject to Required Minimum Distributions (RMD’s). IRA owners who are 72 or older must draw a set percentage from their IRA each year depending on the owner’s age. Donating some (or all) of that money directly avoids taxes and counts toward the RMD requirement (up to $100,000 per year). Because a QCD is not counted as income, it may also help save on Medicare premiums. Medicare premiums are calculated on modified adjusted gross income, so controlling the amount of income may keep an individual from crossing into a higher premium bracket. Excluding QCD income does not require one to itemize deductions. For those who do itemize deductions, QCD’s cannot also be claimed as an itemized charitable deduction. Donating an IRA QCD is easy. Have your IRA trustee issue a check payable to:
Donating SecuritiesMany investors have stocks or mutual funds that have appreciated over the years and would trigger a significant capital gains tax, if sold. A common strategy to avoid that expense, and get a full charitable deduction (if applicable), is to directly gift highly-appreciated securities to a qualified charity. To qualify, securities must be held for more than one year; and it is best if they are common, publicly held shares. Donating securities this way avoids capitalgains taxes that are triggered if the securities are sold and then the proceeds donated. If the donator itemizes deductions (beyond the standard deduction), the full value of the securities is tax-deductible.
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