August 29, 2017
By Jacquelyn R Campbell
When there is a natural disaster, we are inclined to help others in need in ways we can. Donations of goods and money are the most common. Although we don’t make those donations for tax reasons, a potential tax benefit will help your charitable dollars go further.
Here are a few tips for your donations:
Qualified Charitable Distributions (QCD)
Up to $100,000 from your traditional or inherited IRA can go directly to a charity when you are 70 ½ years old. Because a QCD is not taxable, it has no effect on your adjusted gross income (AGI), taxability of your social security income, Medicare premium costs and some other exemption and credit phase-outs on your individual tax return.
This differs from how you normally take distributions from your IRA as taxable income. Typically, the additional income adds to your other income and increases your adjusted gross income (AGI). Depending on your scenario, if you normally itemize deductions or claim the standard deduction, you have the potential to itemize your tax deductions and reduce your taxable income by the amount of your gift. This results in higher taxes.
For additional information, please contact us at 352.683.7365 or email to email@example.com.