Charitable Contributions to the Gardens
Looking for ways to reduce your taxes through charitable giving, but finding your traditional charitable contributions are no longer deductible as of 2018? The new tax law passed in December 2017 has doubled the federal standard deduction amounts beginning in 2018. This means that many taxpayers will no longer itemize their deductions and will find their charitable contributions are no longer tax-deductible. However…
If you’re older than 70 ½ you may be able to transfer up to $100,000 annually from your IRAs to a qualified charity and have your taxable income reduced. A Qualified Charitable Distribution (QCD) allows IRA owners over the age of 70 ½ to transfer part or all of their annual Required Minimum Distribution (RMD) directly to a qualified charity such as the Mendocino Coast Botanical Gardens. Money transferred from your IRA to the Gardens will not be included in your Adjusted Gross Income, thereby, reducing your taxable income and possibly reducing the amount of Social Security subject to tax as well as the Medicare high-income surcharge.
Certain requirements must be met:
- You must be 70½ or older to be eligible to make a QCD.
- QCDs are limited to the amount that would otherwise be taxed as ordinary income (i.e. up to your annual RMD). This excludes non-deductible contributions.
- Funds must be distributed directly to the charity. Funds distributed directly to you, the IRA owner, and which you then give to charity do not qualify as a QCD.
- The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.)
- For a QCD to count towards your current year's RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
- Any amount donated above your RMD does not count toward satisfying a future year's RMD.
Please consult your tax preparer or financial advisors for further details.