Are you receiving a required minimum distribution (RMD) from your IRA? If so you may save hundreds of dollars by donating directly to charity from your IRA. In 2018, a married couple would need to have more than $26,600 in itemized deductions in order to itemize and a single person over $13,300.
For people over 70 and half this donation could save you money and help a public charity. At this age most people are required to take a required minimum distribution from their IRA which in turn counts toward their adjusted gross income. If, however, part or all of that amount is donated directly to a charity it is no longer counted toward that person’s adjusted gross income. Using this strategy, a $1,000 donation would save $300 in taxes for those in the 30 percent tax bracket or $250 for those in the 25 percent bracket. Making charitable gifts from an IRA could also help avoid the Medicare high-income surcharge and could also reduce the amount of Social Security benefits if any, that are subject to income tax.
To take advantage of this strategy you will need to direct your IRA administrator to transfer the money directly from your IRA to the charity of your choice. It is our hope that one of your choices for this charitable contribution will be our local public library in Kimball.
Dorothy Kersten