Save Income Taxes and Support Your Favorite Charity
November 21, 2019 | Cheryl Hopkins
Individuals can take a Qualified Charitable Distribution (QCD) which is a tax-free savings strategy that allows them to make a charitable contribution to a favorite charity and save on income taxes without having to itemize deductions.
Taxpayers who are age 70 ½ and older are required to take minimum distributions from certain individual retirement accounts. In order to take advantage of a QCD, individuals can have some or all of their required distribution paid directly by their IRA custodian to the charity.
Fortunately, with recent tax law changes the standard deduction for tax year 2019 for married couples over 65 will increase to $27,000. This increase in the standard deduction means that more taxpayers will benefit from using QCD charitable contributions. By making a qualified charitable distribution, taxpayers get the best of both worlds because the qualified charitable distribution is not subject to income tax (as it would be with a regular IRA distribution) and the couple still can take the entire $27,000 standard deduction.
If you have not taken your minimum distribution for 2019, there is still time to implement this QCD tax savings strategy before December 31. Also, make note that the minimum distribution for next year can be given to your favorite charity in January 2020, which would allow the charity to make full use of your contribution for the entire year.
Please contact your HHM tax advisor for more information on how to make this tax savings contribution happen.