North Idaho Fine Homes - Josh Ivey and Jennifer Ivey, REALTORS
  • Home
  • Properties
    • 714 Church St >
      • 714 Church St Photo Gallery
    • 24557 Highway 2 >
      • 24557 Highway 2 Photo Gallery
    • 306 Shepherd Rd >
      • 306 Shepherd Rd Photo Gallery
    • NNA Dufort Rd >
      • NNA Dufort Rd Photo Gallery
    • 11295 N Avondale Lp >
      • 11295 N Avondale Lp Photo Gallery
    • NNA Crooked Ear Dr >
      • NNA Crooked Ear Dr Photo Gallery
    • The Cottages - Waterfront Community in Sandpoint, Idaho >
      • The Cottages Photo Gallery
    • 20 Acres - Lone Cedar Lane >
      • 20 Acre Lone Cedar Lane Photo Gallery
    • 180 Deerhaven Dr >
      • 180 Deerhaven Dr Photo Gallery
    • 206 E Third Ave >
      • 206 E Third Ave Photo Gallery
    • 714 Church St >
      • 714 Church St Photo Gallery
    • 6850 Spurwing Loop #204 >
      • 6850 Spurwing Loop #204 Photo Gallery
    • 3921 W Accipter Dr
    • 6416 River Rd
    • 660 Gemini Trail
    • 210 W Third Ave >
      • 210 W Third Ave Photo Gallery
    • 822 Northview Dr
    • Coeur d Alene Area Search
    • Sandpoint Area Search
  • Destinations
    • Coeur d Alene
    • Sandpoint
  • Lifestyles
    • Amusement Park
    • Bicycling
    • Fishing
    • Golfing
    • Outdoor Adventure
    • Skiing
    • Snowmobiling
  • Professionals
  • Perspectives


​I am the master of my fate, i am the captain of my soul

~ William Ernest henley

Qualified Charitable Contribution

4/8/2019

0 Comments

 
Picture
If you're at an age where you need to be taking Required Minimum Distributions (age 70.5) from your IRA, a qualified charitable contribution and some planning may allow you to lower your overall tax liability.

Let's say that a couple's 2019 itemized deductions include $8,000 in property taxes, $4,400 in interest and $20,000 in charitable contributions.  That would total $32,400 which exceeds the 2019 $25,300 standard deduction for married couples, 65 years of age or older, filing jointly. 

Their required minimum distribution from their IRA is $40,000 which will be taxed at ordinary income.  If this couple is in the 24% tax bracket, the tax liability would be $9,600.

Alternatively, if they made the $20,000 in charitable contributions from their IRA as a Qualified Charitable Contribution, it would not be taxable in the withdrawal.  The balance of the RMD of $20,000 would be taxable at 24% which would have a tax liability of $4,800.

Their $32,400 worth of itemized deductions would be reduced by the $20,000 because it was paid from the IRA which makes their itemized deductions $12,400.  The $25,300 standard deduction would benefit them more by an amount of $12,900 increased deductions.  At 24%, this would reduce their liability by $3,096.

In the first instance, they would owe $9,600 in taxes due to the $40,000 RMD from their IRA.  In the second example, because of the increased amount by taking the standard deduction, the net tax liability would be $1,704 ($9,600 - $4,800 - $3,096 = $1,704).

This example shows how shifting contributions to a Qualified Charitable Contribution will get the same amount to the charity but lower the Required Minimum Distribution that must be recognized as ordinary income.  The shifting also gives the taxpayers the advantage of a higher amount of the standard deduction than the itemized deduction.

As always, before taking action, you should get advice from your tax professional on how this strategy may impact you.  There is information available on www.IRS.com for IRS Required Minimum Distribution FAQs and Qualified Charitable Distributions.

0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Author

    Josh & Jennifer Ivey - Your trusted real estate advisers for all of North Idaho.

    Archives

    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014

    Categories

    All
    Home Buying
    Home Cleaning
    Home Design
    Home Finance
    Home Maintenance
    Home Selling
    Investments
    Lifestyle

    RSS Feed

221 E Sherman Ave
Coeur d' Alene, Idaho 83814

200 Main St
Sandpoint, Idaho 83864
Tomlinson Sotheby's International Realty
Josh Ivey (208) 946-7355
josh.ivey@sothebysrealty.com

Jennifer Ivey (208) 946-7816
jennifer.ivey@sothebysrealty.com

©2016 North Idaho Fine Homes. Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated.