Tax-Wise & Medicare-Wise Charitable Giving Today
January 2021 Update - During 2020, the CARES Act created a holiday for required minimum distributions from IRAs. The CARES Act holiday for required minimum distributions from IRAs was NOT extended into 2021. In 2021, IRA owners age 72 and older will resume their required minimum distribution (RMD) from IRAs.
The law remains that IRA owners age 70½ and older can make a charitable rollover gift of up to $100,000 from their IRA to public charities, this charitable IRA rollover will count toward their RMDs.
|May satisfy your annual required minimum distribution (RMD) up to the amount of the gift|
|Reduce your taxable income, even if you do not itemize deductions, because it allows you to give from pre-tax assets and your distribution is excluded from taxable income|
|May prevent you from being pushed into a higher tax bracket or higher Medicare Part B or Part D premium bracket because the gift reduces your taxable income.|
|Helps avoid limits on charitable deductions|
|Minimizes the effect your giving has on your cash flow because the gift is from your assets (your IRA), not your check book|
If you are at least 70 1/2, you can make annual charitable gifts through your IRA. At your direction, your IRA custodian will transfer the gift you designate directly from your IRA to a qualified charity. This is known as a Qualified Charitable Distribution, or QCD.
Many people have Donor Advised Fund (DAF)s which allow them to donate assets for charity today and receive a tax deduction now even though the actual funds are not granted by the donor to the final charity until some point in the future. DAFs can be used to make current gifts and future gifts.
Learn more making a gift to United Way of Santa Barbara County through your existing DAF.