Donation of RMD to reduce taxable income?

[Janitor Bob]

Most of my clients are fairly young so I am relatively inexperienced at retirement issues.....I am just beginning to have clients reaching the 70-1/2 age and facing required minimum distributions.

I received a voice mail from one such client today. She mentioned that she heard that she could donate some of her RMD to a charity and thus reduce her taxable income. Have any of you heard of this? If so, can you point me to a good reference on the subject?

The way she made it sound, she was thinking that she could somehow donate some of here RMD to a charity and have it DIRECTLY reduce her income....as opposed to running it through schedule A (she does not have enough to itemize).

[Don in Upstate NY]

Your client was referring to a "qualified charitable distribution". You can read about them in Pub 590, page 58. Basic points are:

Direct transfer from an IRA to a qualified charity, limited to $100,000 per year.

Taxpayer must be over 70-1/2 on date of contribution.

Distribution is non-taxable, appears on line 15a but not 15b of the 1040. Mark line as QCD. Counts toward MRD.

This provision of the law expired on December 31, 2009. So all this is academic unless and until congress extends the deduction.

[Janitor Bob]

Your client was referring to a "qualified charitable distribution". You can read about them in Pub 590, page 58. Basic points are:

Direct transfer from an IRA to a qualified charity, limited to $100,000 per year.

Taxpayer must be over 70-1/2 on date of contribution.

Distribution is non-taxable, appears on line 15a but not 15b of the 1040. Mark line as QCD. Counts toward MRD.

This provision of the law expired on December 31, 2009. So all this is academic unless and until congress extends the deduction.

Thanks so much Don!