Can't Deduct Charitable Gifts Anymore? Retirees Have a Valuable Workaround
This year, you may be disappointed to find that you can no longer deduct your charitable gifts on your taxes. That’s because the 2017 tax law nearly doubled the standard deduction, sharply cutting the number of filers who itemize.
Under the old law, 1 in 5 filers took a charitable deduction, reports the Tax Policy Center; now, just 8 percent are expected to. You’re not paying more in taxes as a result — but you’re also not getting credit for your generosity.
If you’re a retiree over age 70½, though, you have a workaround that preserves the tax benefits of giving, even if you don’t itemize. Once you reach this age, you must start taking required minimum distributions (RMDs) from your individual retirement account every year. In what’s called a qualified charitable distribution (QCD), you can donate all or a portion of your RMDs, up to $100,000 a year, directly to charity.
While you don’t get a write-off for your gift, you also don’t owe taxes on that retirement-account distribution. For a taxpayer in the 22 percent bracket, funneling a $5,000 RMD to charity saves $1,100 in federal income taxes, the same as if you’d been able to deduct it.
https://www.aarp.org/money/taxes/info-2019/charitable-gifts-new-tax-law.html?cmp
Thought this was worth passing along, but it's always good to double check anything of this sort with your tax adviser before making any moves that could become an issue later on.
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Response to Sherman A1 (Original post)
