Contributing to the Venice Presbyterian Church directly from your IRA

Did you know that you could contribute to the church directly from your IRA? If you are 70 ½ and are taking your required minimum distribution (RMD), you can use all or part of it to contribute directly to Venice Presbyterian Church since VPC is a 501(c) (3) organization. In this way, you will not add to your gross taxable income and the amount will be considered a charitable contribution. If you do this, you may not deduct the amount as an itemized contribution on your taxes but the amount will not be taxed as income either. Keeping your taxable income lower may help reduce other tax deductions such as Social Security and Medicare. The maximum allowable amount is $100,000 per year for couples filing jointly, $200,000 if you and your spouse file separately and have separate IRAs. The contribution must be made directly to the church; it cannot come to you first or it would be considered income and therefore taxable. Some ROTH IRAs may qualify but you would need to clarify that with your tax adviser. Since RMDs can be taken quarterly, you could use this as your church contribution instead of weekly or monthly giving. Here’s an example: Assume your RMD from your IRA is $25,000. You decide to give $5,000 directly to church from your IRA and you take the $20,000 difference, you would pay taxes on the $20K, not the entire $25K RMD. So, you will get a $5K tax deduction. This is called a Qualified Charitable Distribution or QCD. You need to complete a form available from your tax adviser and you must be 70 ½ . It must come out of your IRA before the December 31 deadline in any year. Sounds like a great way to help VPC fulfill its Vision and save you some taxable income. You should consult an adviser to help you and to ensure that you have specified VPC as the charity and that your name is on the contribution so that VPC knows it’s from you.