Smart Giving Ross Johnson

Smart

Giving Ross Johnson

Our parish and many charities were hurt by the COVID pandemic with lack of giving and restrictions on fund raising events.

Ask the question, can I or someone I know make a difference? When applicable, do it in a tax efficient manner. The answer is a resounding yes, I can make a difference.

Two strategies to know

1. There is a unique opportunity for those over 70½ to benefit from gifting from a traditional IRA. Qualifying individuals can take up to $100,000 from an IRA and gift to a qualified charity and not have the distribution count as reportable income. This is especially helpful for individuals who have mandatory distributions who do not want the income counted for tax purposes.

2. Many owners of IRAs have a required minimum distribution annually. Applying the distribution, or part of it, as gift to charity excludes it from income. In other words, you don’t have to pay taxes on it!

True Story: there is a parishioner who went into nursing and got a great job which provided retirement at age 50. She also served in the military reserves with retirement at age 60, along with a third job with retirement at 65. She began collecting social security at age 70. She worked hard and planned well. She was surprised to learn from her parents that she would inherit a large taxable IRA. She said, “No Thank You” and suggested the parents make a charitable donation. They did, and were able to see the benefits of that gifting while still alive. And, no one had to pay taxes on the distributions.

In our culture, we don’t talk about money. Maybe it is time we did. Most people give to their church or charity out of their desire to help. Tax laws allow for giving to be both meaningful and strategic.

Abby Boyers