IRA contributions to charity

In order to qualify for an IRA contribution to charity and not include
the withdrawal in income, does the taxpayer have to itemize on
his tax return or can he use the short form ?

[email protected]

Thank you



gbreen42,

The tax form 1040-A can be used when making a Qualified Charitable Distribution (QCD) from your IRA.

You enter the total amount distributed from your IRA on line 11a. If the total distribution is a QCD, enter 0 on line 11b. If only part of the distribution is a QCD, enter the amount that is NOT a QCD on line 11b.

The QCD is made directly from the IRA custodian to the charity. The IRA owner must be at least age 70.5 when the distribution is made. Total QCDs can not exceed $100,000 per IRA owner for the year. On a joint return, each taxpayers can make a QCD up to $100,000 from their IRA.

When the IRA includes non-deductable contributions, the distribution is first considered to be made from what would otherwise be taxable income.



In short, a QCD is not included in income and therefore cannot be itemized, whether you use the short form or the full 1040.



Some may naively think that taking a distribution from an ira, paying tax on it but then deducting the contribution is the same as a QCD. It is not. Ed says that when you add to AGI by taking such a distribution all sorts of bell and whistles go off. Your phase outs change, you raise the floor for misc. itemized deductions, you can deduct less for medical..etc.

By doing a QCD you avoid all this and keep your agi lower.



Plus is might cause your Social Secuity income to be taxed – or at a higher level v. a QCD.



Also note that a QCD can only include taxable amounts without basis. If any basis was mistakenly transferred to a charity, it should not be included in the reportable QCD. This would be a separate distribution requiring a filing of Form 8606 to show reduced basis in the IRA. This should then allow a charitable contribution deduction on Sch. A for the basis amount, since no such deduction is allowed for a QCD.

Ed C.



Add new comment

Log in or register to post comments