Over the years, the Foundations and Conference that I serve have only received a handful of donations from an IRA. I’m just realizing how sad this is considering how many of our donors are in their 70’s, 80’s, and 90’s. Every time one of our donors over the age of 71 cuts a check when they could be giving through their Traditional IRA, they are overpaying on their Income Tax! As an accountant, that just hurts to see people overpaying their taxes.
The reason this is important is that giving through your Traditional IRA WILL lower your taxes…every time. Giving by check or cash MAY lower your taxes if you are one of the few that itemizes taxes…and only by the amount above the Standard Deduction. Here’s some examples:
- Couple aged 75; $90k taxable income; Claims Standard Deduction; $9,000 in Charitable Giving: If the couple gives through their IRA, they save $1,980 in taxes. If they give a check, no tax savings.
- Individual aged 82; $40k taxable income; Claims Standard Deduction; $2,000 in Charitable Giving: If the individual gives through an IRA, they save $240 in taxes. If they give a check, no tax savings.
- Couple aged 90; $150k taxable income; $12k of Itemized Deductions excluding charitable donations; $30,000 in Charitable Giving: If the couple gives through their IRA, they save $6,600 in taxes. If they give a check, they save $3,718 in taxes.
In the video, I guide you through the process so that you can help your donors give through their IRA. A big thanks to Rich Platt for walking me through this process.
- Charles Schwab IRA RMD Calculator: https://www.schwab.com/ira/understand-iras/ira-calculators/rmd
- Rich Platte at BankWest: https://www.bankwest-sd.bank/wealth-management/trust-investment-management/
- Kiplinger’s IRA Distribution Article: https://www.kiplinger.com/retirement/retirement-plans/required-minimum-distributions-rmds
- Harvard’s FAQ on IRA QCD’s: https://alumni.harvard.edu/college/college-giving/gift-planning/ira-qualified-charitable-distribution/qcd-faqs