For Mark Roberts Use: Most people enjoy giving to charity, and they also appreciate the possibility of a tax deduction. For years, rules allowing for a qualified charitable distribution (straight from your IRA to the charity of your choice) have been hung up in the political machine. Some years you could claim the deduction, and in other years you couldn’t or you weren’t sure.
That’s because this tax deduction was part of a temporary tax relief package that would lapse and sometimes be reinstated. It was difficult for most of us to keep track of the changes from one year to the next, but for those of you who enjoy charitable giving, we have some good news: the Protecting Americans from Tax Hikes Act of 2015 finally made the rules regarding qualified charitable distributions permanent.
That means you can now donate to charity, directly from your IRA, every single year that you choose to do so. However, in order to claim this tax deduction, you must meet some strict parameters.
- You must be age 70 ½ by the date of the distribution
- You must submit a distribution form to the IRA custodian, asking for a check made payable directly to the charity of your choice
- You have to ensure that no taxes are withheld from the qualifying charitable donation (all of the money must go to the charity)
- Then, you should send the check directly to the charity
The key to a qualified charitable distribution is that the funds must travel straight from your IRA to your chosen charity. If the funds go through you first, even through a check that you endorse over to the charity, that money is taxable and will not count as a charitable distribution.
Qualified charitable distributions can provide you with a terrific way to give to your favorite charity, without incurring any extra tax liability for yourself. Remember to follow these rules precisely, or your contribution could be taxable. For more information on qualified charitable contributions, or on your IRA distributions in general, give us a call. We can help ensure that more of your money goes exactly where you want it to go.