Qualified Charitable Distributions – A Win-Win for Those 70-1/2 or Older with IRAs

Qualified Charitable Distributions – A Win-Win for Those 70-1/2 or Older with IRAs

by on March 27, 2018

Toward the end of 2017 Congress gave American taxpayers an early Christmas present called the Tax Cuts and Jobs Act (TCJA). 

Whether or not this economic stimulus has lasting positive effects remains to be seen, but one thing is for certain in the short run. If you are 70-1/2 or older, Qualified Charitable Distributions (QCD) from your IRA make more sense now than ever.  

The reason is that your standard deduction nearly doubled, more than making up for the disappearance of the personal exemption. If you are married, your standard deduction increased to $26,600 ($1,300 more for each person than the standard deduction of $24,000 because you are both 65 or older), and if you’re like most Americans you won’t need to itemize in 2018. If so, don’t waste your charitable contributions! Give them tax-free directly to a charity from your IRA as a QCD.

You have to take Required Minimum Distributions (RMD) from your IRA anyway, so why not direct some or all of your RMD to the charity of your choice. To be clear, your QCD is not limited by the amount of your RMD.

You can give up to $100,000 as a QCD from your IRA – tax-free! And if you can afford to do that, you should in order to dodge the limitation on itemized charitable deductions to 60% of your adjusted gross income.

For most taxpayers age 70-1/2 or older with IRAs, QCDs will be a win-win all around in 2018. 

For more information here is Scott's colleague, Eddie Holland, on the Talking Money® Live radio show educating listeners on how tax reform may affect you.

Qualified Charitable Distributions – A Win-Win for Those 70-1/2 or Older with IRAs

by on March 27, 2018

Toward the end of 2017 Congress gave American taxpayers an early Christmas present called the Tax Cuts and Jobs Act (TCJA). 

Whether or not this economic stimulus has lasting positive effects remains to be seen, but one thing is for certain in the short run. If you are 70-1/2 or older, Qualified Charitable Distributions (QCD) from your IRA make more sense now than ever.  

The reason is that your standard deduction nearly doubled, more than making up for the disappearance of the personal exemption. If you are married, your standard deduction increased to $26,600 ($1,300 more for each person than the standard deduction of $24,000 because you are both 65 or older), and if you’re like most Americans you won’t need to itemize in 2018. If so, don’t waste your charitable contributions! Give them tax-free directly to a charity from your IRA as a QCD.

You have to take Required Minimum Distributions (RMD) from your IRA anyway, so why not direct some or all of your RMD to the charity of your choice. To be clear, your QCD is not limited by the amount of your RMD.

You can give up to $100,000 as a QCD from your IRA – tax-free! And if you can afford to do that, you should in order to dodge the limitation on itemized charitable deductions to 60% of your adjusted gross income.

For most taxpayers age 70-1/2 or older with IRAs, QCDs will be a win-win all around in 2018. 

For more information here is Scott's colleague, Eddie Holland, on the Talking Money® Live radio show educating listeners on how tax reform may affect you.


Qualified Charitable Distributions – A Win-Win for Those 70-1/2 or Older with IRAs

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