For Mark Roberts’ Use: Giving to charity feels good and makes a difference in the world, but it can also earn you a valuable income tax deduction. Of course, as with anything concerning taxes, strict rules and procedures apply to these donations, in order to be counted on your tax return. So, how can you give a gift to a favorite organization, without triggering extra trouble for yourself?

Qualified charitable contributions might be the answer. This type of charitable giving provision allows you to transfer funds straight from your IRA to the charity of your choice. And while the IRS has gone back and forth in previous years, over whether this type of gift is allowed, the good news is that qualified charitable distributions are definitely going to be counted for 2018 and going forward.

So now the question is, how do you perform this type of maneuver correctly, so that you’re eligible for the income tax deduction? Just remember these four steps:

  • You must be age 70 ½ or older
  • Submit a distribution form to your IRA custodian, asking for a check to be made payable to the charity you’ve chosen
  • Ensure that no taxes are withheld from the donation (the charity must receive the entire amount)
  • Send the check directly to the charity. Funds cannot land in your account first.

Keep in mind that the last step is a big sticking point with the IRS. If the funds land in your account and then you write the check, the money will be counted as your personal income and will not count as a qualified charitable distribution.

As with all financial and tax maneuvers, it’s important to follow guidelines carefully. If you have any questions about qualified charitable distributions, or any other financial planning topic, give us a call to schedule an appointment. We can help you sort through your options and decide upon the most tax-friendly ways to accomplish your goals.