IRAs can be a tax efficient way to give to charity.
You want to give to charity.
You probably also want to maximize your money.
How do you do this?
According to a recent Kiplinger article titled “How to Ensure Your IRA Donation to Charity Is Tax-Free,” using your IRA may be a good option.
Are you older than 70½?
Why do this?
You can kill two birds with one stone.
You can satisfy your RMD without being taxed.
But you must follow the rules for a qualified charitable distribution.
What are some steps you should take to keep from being taxed on the gift?
Make a direct transfer.
If it is transferred directly from your IRA it will not be counted as part of your adjusted gross income.
You IRA administrator will be able to help you make the donation.
One way to make the donation is to write a check—if you have check writing privileges with your IRA.
If not, you could use a qualified minimum distribution form so the money is taken directly from your account.
If the IRA sends the check, it should include your name.
You should also include the address
You will need a receipt from the organization for your tax records.
Your IRA may have a minimum amount you can donate to charity.
Be sure your wishes fall within the guidelines.
Finally, you need to be sure the transaction is processed by the end of the year.
November 30 is a safe cut-off date for giving notice to your IRA administrator.
By planning ahead, you could help yourself and a good cause in one transaction.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Kiplinger (July 28, 2017) “How to Ensure Your IRA Donation to Charity Is Tax-Free”