The Smart Way to Give

If you are philanthropic by nature, and have a financially comfortable retirement, you may be wondering the best way to donate to your favorite charity. If you are at least 70-1/2 you have a special opportunity in 2008 and 2009. If you transfer your funds from an IRA directly to the charity, they will not be included in your taxable income, as they would if you took an IRA distribution and paid it over to the charity.

You may be wondering why this matters, as the charitable payment is tax-deductible. However, many deductions depend on your adjusted gross income (AGI), for instance medical expenses are only deductible to the extent that they exceed 7.5% of AGI, so if you can keep the money out of your income it will help your tax situation. If you need to make a required minimum distribution for 2008 from your IRA plan to avoid penalties, you have until April 1, 2009 to donate directly to charity, satisfy your minimum distribution, and avoid having the amount counted as income to you.

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3 Comments

  1. Modern Bedroom
    Posted March 3, 2009 at 3:45 pm | Permalink

    I am a retired person and your posting helped me alot. Thanks for posting this wonderful info.

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  2. Posted March 10, 2009 at 11:49 pm | Permalink

    Great information for those that have retired already. You can give gifts to children also up to certain levels and they will not have to pay taxes.

    South Beach Acai’s last blog post..The Health Benefits of Acai Berry

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  3. London Notary
    Posted March 11, 2009 at 2:18 pm | Permalink

    thanks a mill! great info. helped alot

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