IRA Contributions

Individuals 70 ½ or older to give directly from their IRAs rather than having to take a distribution that would trigger an income-tax bill. The rules allow you to save on taxes and, as a result, give more if you want. Because a QCD reduces income and is not an itemized deduction, it even benefits investors who do not itemize.

To be tax free, the donation must go directly from the account to the charity without passing through the investor’s hands. A $10,000 donation could thus escape $2,500 in income tax, assuming a 25 percent tax bracket, and the investor could therefore give the entire $10,000 rather than $7,500 if some had to be held back for taxes.

“The beauty behind the qualified charitable distribution is that it’s not a deduction, but, rather, the IRA distribution is excluded from gross income” says Sarah Rebosa, a tax specialist and partner in Cullen and Dykman, a Garden City, New York, law firm. “Therefore, individuals who wouldn’t otherwise be entitled to a charitable deduction — taxpayers who take the standard deduction — can now obtain a tax benefit from contributing to charities.”