We are only 160 days away from Tax Day 2020. While it may be a little early to start preparing for filing taxes, but it is time to start thinking about specific tax requirements.
If you are 70 ½ years or older, the IRS requires you to take required minimum deposits (RMDs) from your tax-deferred accounts. As you know, this increase in income may push you into a higher tax bracket and reduce your eligibility for credits or deductions. If you would like to reduce the impact of RMD income, you may consider making a qualified charitable distribution (QCD) to a nonprofit organization near and dear to your heart.
A QCD is a direct transfer of funds from an IRA custodian to a qualified charity. Amounts distributed as a QCD can go towards satisfying your RMD for the tax year, up to $100,000, and can be excluded from your taxable income. Regular IRA withdrawals would, of course, still be counted as taxable income.
Certain conditions must be met to make a Qualified Charitable Donation. First, the organization must be a 501(c)(3) organization that is eligible to receive tax-deductible contributions. Second, the funds must be transferred directly from your IRA custodian to the organization of your choice. Lastly, the funds must come out of your IRA before the 2019 RMD deadline of December 31.
The best way to determine if your IRA and charity qualify for QCDs is to talk with your trusted tax advisor. He or she will be able to tell you whether or not you can satisfy your RMD with charitable giving.
At Lions Pride, we appreciate the giving hearts of those who have contributed through their RMD over the past few years. We hope you’ll consider joining them if you are required to withdraw from your tax-deferred retirement accounts. Thank you in advance for helping us expanding our support of Lions Camp and all WLF projects.
Lions Pride Endowment Fund of WI, Inc. does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.