Tax Strategies to Benefit both Donor and City Mission
You Can Give City Mission a Boost with Your Required Minimum IRA Distributions...and Pay No Taxes on the Gift!
If you are a high income senior citizen who donates to City Mission, are you taking advantage of a great tax loophole to maximize your gift? Clients across the country are using this strategy to enhance their charitable giving, especially since the 2017 Tax Cuts and Jobs Act practically eliminated the need to itemize.
As you know, once you have hit the "magic age" of 70 and 1/2, the IRS requires that you take a required minimum distribution on your IRA annually. If you don't meet the deadline, the IRS charges a steep 50% penalty tax.Research shows that 83% of all seniors hate paying taxes on the required minimum distribution from their IRAs. So why not give it City Mission...and avoid paying tax on the gift altogether? The resulting increase in donations can provide a real boon to the homeless men, women, and children in Southwestern PA. The higher the tax bracket, the more you give!Here's how you do it:
- Designate City Mission as the required minimum distribution recipient for the year in which you turn 70 and 1/2. (NOTE: The first payment can be delayed until April 1 of the following year.)
- For subsequent years, make the donation to city Mission by December 31.
You will pay NO TAXES on this gift, and City Mission will receive the full amount. And you won't inadvertently slip into a higher tax bracket and end up paying more taxes overall. This doesn't mean more money for you...but it does mean that your donation is larger...often by quite a bit.
You will pay NO TAXES on this gift, and City Mission will receive the full amount. And you won't inadvertently slip into a higher tax bracket and end up paying more taxes overall. This doesn't mean more money for you...but it does mean that your donation is larger...often by quite a bit. For example, for a person in the top tax bracket (37%) whose required minimum distribution is $100,000, wants to donate the money, City Mission would receive only $63,000 after taxes overall. If they utilize the charitable giving loophole, City Mission would receive the full $100,000 as a gift...and you would pay no taxes on this generous donation!
To learn more about this tool to meet the government's IRA tax rules but also boost to charities read this December, 1, 2019 Pittsburgh Post Gazette Article
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