Mark J. Kohler explains how people 70½ or older can give up to $100,000 a year from a traditional IRA directly to charity. The distribution counts toward your required minimum distribution but isn't taxed as income, which saves more than taking the money out and claiming a deduction.
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Donating your IRA to charity sounds awesome, right? Don't pay any taxes on the distribution. Goes right into charity. Best of both worlds. I've got good news and bad news. Bad news, you've got to be 70 and a half years old to not pay any tax on the distribution. Good news, 70 is the new 60. Hey, more people are living longer and they have more money in their IRAs. So here's the rule. You can take out up to $100,000 out of your Iraq, pay no tax on the distribution, go straight to a charity and it qualifies as your rmd. You know that required minimum distribution that you got to take every year. Boom ba da bang. Now here's the other edge of the sword. You don't get a deduction when you give the money to charity like you would with your normal after tax money. But hey, you didn't have to pay tax on the way out. And in fact it might save you more than trying to take the money out and get a deduction for charity rather than not paying tax at all on the distribution net net. This is a great strategy because hey hey, when you're 70 and a half you're giving more to charity anyway because you're going to church thinking hey I might be up at the pearly gate soon. So you want to give this money to charity and get a little extra bonus maybe on the back end, right? Anyway, all kidding aside, I tithe I love to give money to my church and charity and if you're over 70 and a half, this is the way to do it to save taxes and benefit a wonderful church or charity.
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