Posted October 15th, 2018

Charitable IRA Gifts Are Particularly Attractive This Year

Because the Tax Cuts and Jobs Act of 2017 will significantly reduce the number of taxpayers who are able to itemize their charitable gifts on their income tax return, it may be especially advantageous to encourage your donors to consider making all or a portion of their gifts this year through a qualified charitable distribution (QCD) from their individual retirement account (IRA).

The basics

  • Individuals age 70½ or older with a traditional IRA may direct up to a total $100,000 a year to qualified charitable organizations other than donor advised funds or family foundations.
  • Gifts directed in this way can count toward any required minimum distributions (RMD) for the year.This gift can be transferred directly to charity free from federal income taxation and is great for itemizers and non-itemizers alike.
  • The donor must properly report an IRA distribution to charity on his or her income tax return (see “Claiming a Charitable IRA,” September 2018 Give & Take).

Many donors will find themselves unable to itemize their charitable gifts on their tax returns for the first time this year. The doubling of the standard deduction under the new law will prevent many seniors from itemizing their deductions, including charitable gifts. In other cases, those who itemize deductions may make gifts that total more than the amount they are allowed to deduct in the year of the gift. Charitable IRA gifts may be a great alternative for these donors. That is because they do not have to report amounts directed to charity from their IRA, effectively enjoying the same benefit as if they reported the income and fully deducted it.

SHARPE newkirk offers educational materials for use in educating donors about how they may benefit from IRA giving opportunities. These materials include The Charitable IRA brochure, supplementary content for your gift planning communications, PDFs of informational postcards available for immediate download and more. Click here for more tools and information. ■

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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