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Friday, December 7, 2018
Donations for Senior Citizens
The Wall Street Journal reports that Seniors and the charities they support can greatly benefit from the tax laws.
Millions of Americans will no longer get tax deductions for their charitable donations this year. But givers age 70½ or older often have a great way to get around this change.
It involves making donations directly from a traditional individual retirement account to one or more charities by using a smart move with a clunky name—qualified charitable distribution, or QCD.
“This transfer is usually the best way for IRA owners older than 70½ to do their giving,” says IRA specialist Ed Slott.
A growing number of IRA owners can use this maneuver. Roughly 3.2 million U.S. residents turned 70 in 2018, about 50% more than in 2010, according to estimates based on U.S. Census Bureau data.
The new focus on QCDs arises from the tax overhaul. It nearly doubled the standard deduction taxpayers get if they don’t itemize their write-offs for state taxes, mortgage interest, donations and the like on Schedule A.
This deduction is now $12,000 for single filers and $24,000 for most married couples—high enough so that nearly 29 million more filers will take it than in 2017. Those who do will no longer get write-offs they used to, including for donations.
Yet IRA owners who are 70½ and older have the best of both worlds: They can get a tax break for donations and take the higher standard deduction. In fact, the standard deduction rises to $13,600 for singles and $26,600 for couples age 65 and older.