CPA & Business Advisory Blog

Can you make a distribution from your IRA to a charitable organization?

Several tax breaks are on the books for 2011 but may be gone next year unless they are extended by Congress. One of them is tax free distributions by those age 70 ½ or older for charitable purposes.

  • What it is: Taxpayers who have reached age 70 ½ can make a distribution of up to $100,000 directly (by the trustee of the IRA) from the IRA to a charitable organization.  The distribution is not taxable and the charitable deduction is not allowed, but the distribution counts towards a taxpayer’s required minimum distribution. 
  • Who it applies to:  Taxpayers age 70 ½ with an IRA and are required to take a distribution. 
  • Benefit:  Because charitable contributions are not a dollar for dollar reduction in tax, the taxpayer benefits significantly depending on the amount of the direct charitable contribution. 
  • What you can do if this applies to you:  Contact your IRA trustee and direct them to make the charitable contribution to your favorite charity.

If you feel this situation applies to you, post a comment below or contact our Tax Planning & Preparation Group to review your individual tax position.

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