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In 2018 the new tax law went into effect and it may be less likely that you will be able to itemize. Some estimates say between 5-10 percent of those filing. Therefore, the previous income deduction for contributions to charities will be lost for many people. (http://www.investmentnews.com/article/20180103.)
While that’s not necessarily a bad thing, it just means that instead of itemizing, many couples will opt for the new standard deduction. For married couples over age 65 that will be $26,500 ($24,000 plus $2,600 over age 65 if filing jointly.)
A Qualified Charitable Distribution (QCD) has been around for a few years but might offer even more benefits in 2020. A QCD allows you to leverage the IRA distribution per spouse of up to $100,000 a year. (http://www.kiplinger.com/taxes.)
This allows IRA owners over age 70 ½ to continue to give money to charities directly from their IRA’s in a tax-advantaged manner. By following this tax strategy there are two advantages. First, a QCD counts towards the individual’s required minimum distribution. Second, the distribution is excluded from the taxpayer’s income. It is this second benefit that really shines under the new tax law. (https://www.kiplinger.com/article/taxes/T054-C032-S014.)
As you see, there is a good reason to utilize a QCD, especially if you take the standard deduction in 2018 and are required to receive RMD’s.
Give us a call so that we might explore how this tax benefit might work for you.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.