Sheila Kinman at the Community Foundation shares how you can take advantage of both the IRA Charitable Rollover and Endow Iowa Tax Credits….(read more)

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The IRA Charitable Rollover, also known as a Qualified Charitable Distribution (QCD), is a tax-efficient way for individuals who are 70 ½ years or older to support their favorite charities while also receiving a tax benefit. This charitable giving strategy allows individuals to make donations directly from their Individual retirement account (IRA) to a qualified charitable organization without incurring taxes on the distribution.

Under the IRA Charitable Rollover provision, individuals can donate up to $100,000 per year from their IRA to a qualified charity. This distribution counts towards the Required Minimum Distribution (RMD) that individuals are required to take from their IRA once they reach the age of 70 ½, helping them meet their tax obligations while supporting a charitable cause.

One of the key benefits of the IRA Charitable Rollover is that the donated amount is not included in the donor’s taxable income. This can be particularly advantageous for individuals who do not itemize their deductions or who are subject to limitations on their charitable deductions. By making a direct donation from their IRA, individuals can support their favorite charities without increasing their taxable income.

Furthermore, the IRA Charitable Rollover can be a valuable tool for individuals who are philanthropically inclined and looking for ways to maximize the impact of their charitable giving. By donating directly from their IRA, individuals can support charitable organizations that are important to them while also reducing their tax liability.

It is important to note that there are certain rules and limitations associated with the IRA Charitable Rollover. For example, the donation must be made directly from the IRA custodian to the qualified charity in order to qualify for the tax benefits. Additionally, the donation cannot be made to a donor-advised fund or a private foundation.

In conclusion, the IRA Charitable Rollover is a smart and tax-efficient way for individuals who are 70 ½ years or older to support their favorite charities while also receiving a tax benefit. By making a direct donation from their IRA, individuals can reduce their taxable income, meet their RMD requirements, and make a meaningful impact on the causes they care about. Consider discussing this charitable giving strategy with a financial advisor or tax professional to determine if it is the right option for you.