November 2018 Client Profile

Lucy and Bill regularly give to charity and have benefitted from tax deductions on their donations in the past. Now, with the new tax changes, can they still claim a charitable deduction if they don’t itemize on their tax return?

Yes, they can if they make what’s known as a qualified charitable distribution. Both Lucy and Bill can do this if they are at least age 70½ and they make the donation directly from the IRA to the charity. Because individuals with a traditional IRA must begin qualified minimum distributions at age 70½, those not needing the distributions for living expenses may opt to elect this type of distribution to meet minimum requirements while gaining a deduction from taxable income of up to $100,000 of the gift.

They are eligible to make a qualified charitable distribution without itemizing other deductions if their deductions, including the charitable donation, don’t exceed the standard deduction of $24,000 for joint filers, $18,000 for heads of household and $12,000 for singles. Lucy and Bill should consult their tax and financial professionals to learn more.

Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.