The Vegetarian Resource Group Blog

Charitable donations from your IRA could save taxes!

Posted on December 12, 2016 by The VRG Blog Editor

According to the Law Office of Jill A Snyder, Congress has revived a
law that lets you make charitable donations (such as to The Vegetarian
Resource Group) directly from your IRA, which might provide you with
some significant tax advantages.

If you a’re over the age of 70½, you’ are required to take minimum
distributions each year from your IRA, and you have to pay income tax on
those distributions. But the “charitable rollover” law lets you transfer
assets from your IRA to a charity, and whatever amount you transfer
reduces the amount you a’re required to withdraw. So if you a’re
required to withdraw $20,000 in 2016, but you instead donate $20,000 to
charity, you don’t have to withdraw any funds for yourself, and you
don’t have to pay any income tax.

You won’’t get a charitable deduction for the amount you donate in this
way. However, donating directly from an IRA may be better than taking a
distribution and then making a donation, because it results in a lower
adjusted gross income – which can help you avoid taxes on Social
Security benefits, reduce your Medicare premiums, limit the 3.8% surtax
on investment income, and qualify for other deductions and credits.

In addition, donating from an IRA is definitely to your advantage if you
otherwise wouldn’’t be eligible for a charitable deduction, either
because you don’’t itemize your deductions or because you’ are subject
to the charitable deduction “phase-out” for higher-income taxpayers.

To qualify, you must contact the plan custodian and have the custodian
transfer the assets directly to the charity. If the custodian sends you
the funds and then you give them to the charity, you’’ll have to pay
income tax on the distribution.

You can donate up to $100,000 to charity each year from an IRA. A
married couple can donate up to $100,000 each, as long as each spouse
contributes from his or her separate account.

This is not legal or financial advice, which you should obtain from your
legal or financial advisor.

Leave a Reply

  • Donate

  • Subscribe to the blog by RSS


    Sign up for our newsletter to receive recipes, ingredient information, reviews of new products, announcements of new books, free samples of products, and other VRG materials.

    Your E-mail address:
    Your Name (optional):

↑ Top