Qualified Charitable DistributionsSubmitted by Prosperity Advisory Group on August 28th, 2018
by Sara Stebbins
2018 brought about numerous changes in the tax law that will result in more and more taxpayers taking the standard deduction rather than itemizing. One thing left unchanged was the tax deduction for charitable giving. However, because the number of people itemizing will drop, less people will be taking advantage of charitable giving since gifts to charity are included as an itemized deduction only. Or is it?
If you are required to take a required minimum distribution (RMD) from your IRA, you must distribute a specific amount from the IRA. However, you have the option of where to distribute the money. The first option is to take it for yourself whether it be distributed to you by check or to your bank account for spending or to non-qualified (non-IRA) account for investing. By utilizing the first option, you will report the RMD as ordinary income on your tax return. The second option you have is to distribute the RMD directly to a qualified charitable organization. By doing this, you meet your RMD requirement but do not have any reportable ordinary income because it went directly to charity.
To learn more about qualified charitable distributions or other gifting strategies, contact Prosperity Advisory Group so we can assist you on your financial journey to freedom. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.