With the new tax law changes from the 2017 Tax Cut & Jobs act, many Americans will be utilizing the increased standard deduction rather than itemizing. Those of you who are subject to the Required Minimum Distribution (RMD) rules can make distributions to your favorite charities from your IRA.
This is a savvy strategy that will reduce your RMD dollar for dollar (up to $100,000) and thereby reduces the taxable amount of your overall distribution. Charitable contributions using RMD’s reduces your gross income/taxable income, lowering your tax liability and benefiting the qualified charity/charities of your choice.
Keep in mind that you should keep track of how much of your RMD goes to charity, because at this time the 1099R you receive will not identify the charitable distribution. You will need to report the transaction as not taxable. Rethinking your strategy to minimize your tax bill takes a little creativity and you can turn your good deed into a win for yourself by minimizing your tax bill under the new laws.
As always, we are here to help. If you have questions about your charitable contributions using RMD’s or the new tax law changes, contact us today to schedule an appointment.