Tax Benefit for IRA Charitable Contributions
by Ryan Beadle
Most taxpayers know that contributions to a tax-deferred retirement account will be taxable income when withdrawn. However, until January 1, 2010, individuals 70½ and older who make a qualified charitable distribution of up to $100,000 from a traditional IRA will not include the distribution in taxable income. Married individuals filing jointly may exclude distributions up to $200,000 from income, $100,000 per individual IRA owner. IRC §408(d)(8)(A).
Such distributions are not taken into account for charitable deduction purposes; that is, the taxpayer cannot claim the contribution as an itemized deduction (No double dipping!). Most importantly, the distribution must be made by the IRA trustee directly to a charitable organization as described in IRC §170(b)(1)(A) (i.e., 50-percent organizations).
Tags: Ryan Beadle, Tax Law