Charitable Contributions from Your IRA
Those of us with snow on top are in the era of required mandatory distributions, or RMDs, from our IRAs. While yearly earnings and gains accumulate in an IRA tax-free, distributions from an IRA are taxed. We who are donative-minded typically receive distributions periodically during the year, and periodically decide on our charitable donations only to make them with the after-tax dollars we received from our IRA. But now, current tax law provides a great incentive to those age 70½ supporters who have been making donations to nonprofits such as Friends of Timberline.
The new PATH law extends the authorization of “qualified charitable distributions” (QCDs) to be made direct from an IRA to the recipient organization. The direct contribution counts toward the required distribution but comes out to the nonprofit tax-free. For example, Tim Berliner who has a $30,000 RMD for the year and directs $10,000 to FOT will only have to withdraw another $20,000 to satisfy the RMD requirement. Tim will report only $20,000 of taxable income from his IRA. Of course, Tim will not also get a $10,000 deduction for the IRA-direct donation to FOT, but there are benefits. Among others, Tim’s Adjusted Gross Income (on which several tax-related calculations and consequences are based) will be lower. So when you take your shoe box full of tax receipts and paperwork to your CPA, please explore how use of an IRA-directed distribution to FOT might benefit you. Then check with your IRA custodian or administrator on the authorization required to direct the distribution; FOT can provide a request form for your use. It certainly will benefit FOT, and in turn, the projects that FOT undertakes for our Mountain Treasure.
FRIENDS OF TIMBERLINE
5331 SW Macadam Ave Suite 258 PMB 219
Portland, OR 97239
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