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Donating to a Non-Profit from Your IRA

If you are over 70 1/2, you can donate to TTSA from your IRA and avoid paying income taxes on your IRA distribution. 

 

Here are the steps to set Up an IRA Qualified Charitable Distribution:

  • Meet the QCD requirements.

  • Tax benefit and satisfying your required minimum distributions.

  • Set up a direct transfer to a charity.

  • Select a qualifying charity.

Important Note: Your contribution must be coordinated through your IRA account administrator. Withdrawing the funds yourself and then making a contribution will disqualify it as a tax exempt distribution.

Meeting the QCD Requirements

  • IRA owners must be age 70 1/2 or older to make a tax-free charitable contribution.

  • Those who meet the age requirement can transfer up to $100,000 per year directly from an IRA to an eligible charity without paying income tax on the transaction.

  • If you file a joint tax return, your spouse can also make a charitable contribution of up to $100,000, meaning couples can exclude up to $200,000 of their retirement savings from income tax if they donate it to charity.

  • Qualified charitable contributions must be made by Dec. 31 each year in order to exclude that amount from taxable income.

  • Charitable contributions can only be made from IRAs, not 401(k)s or similar types of retirement accounts.

  • You don't need to itemize your taxes in order to make an IRA charitable distribution. However, you cannot additionally claim a charitable contribution tax deduction on a charitable distribution from your IRA.

  • TTSA will send a donation receipt for your contribution, but remember to request an acknowledgment of the donation for tax purposes if you don't receive it automatically.

 

Tax Benefit and Your Required Minimum Distributions

  • An IRA charitable contribution qualifies to help satisfy the annual minimum distribution requirement from your IRA if that is required (kicks in at 72 years old).

  • A $100,000 charitable contribution from your IRA could save you tens of thousands of dollars in taxes, depending on your tax rate.

  • You don't have to make a huge donation to benefit from this tax break. For a retiree in the 24% tax bracket, an IRA charitable contribution of $5,000 could reduce your income tax bill by $1,200. Even a $1,000 donation would save you $240 in taxes.

Set Up a Direct Transfer to a Charity

  • Funds must be transferred directly from the IRA to an eligible charity by the IRA trustee in order to qualify for the tax break.

  • If you withdraw the money from your IRA and later donate it, it won't qualify as a tax-free qualified charitable distribution.

"Essentially what happens is you are not receiving this distribution, you are not getting taxed on the distribution, it goes straight to the charity,"  says Jill Schlesinger, a certified financial planner in New York.

Select a Qualifying Charity

  • A charity must be a 501(c)(3) organization to receive tax-free IRA charitable contributions. Charities that do not qualify include private foundations and donor-advised funds.

  • You can distribute your required minimum distribution to multiple charities in the same year.

  • TTSA is a qualified 502 (c)(3) charitable organization - federal tax ID 47-2856204, CA Entity ID  3742390

Checks should be made to Truckee-Tahoe Soaring Association

and sent to:

Truckee-Tahoe Soaring Association

P.O. Box 2657

Truckee, CA 96160

Feel free to Contact Us if you have questions or need additional information