Support ILT Tax Free

Here is some helpful information concerning another way people can make tax-free contributions to ILT if you're over 70 1/2 years old.

President Trump's Tax Reduction Act of 2018 was mostly a good thing, but by almost doubling the standard deduction to $24,000.00 for married filing jointly, the Act makes it unfeasible for most people to itemize deductions even if they tithe to their church. But here's a way you can still give tax-free -- if you're over 70 1/2 years old.

If you make Individual Retirement Account (IRA) contributions, those contributions have been excluded from your income. But after age 70 1/2, you have to start taking Required Minimum Distributions (RMDs) from your IRA each year (equal to about 5% of your total IRA), and those RMDs are taxable income. However, if you direct your bank to send all or part of your RMDs to 501(c)(3) nonprofits, those portions of your RMDs do not have to be reported as income. In other words, you could make substantial charitable contributions through your RMDs and still take your full $24,000 standard deduction. Not many people know about this. You could suggest that donors who are over 70 1/2 contact their banks to find out how to do this. They normally have some fairly simple forms to fill out.

Another thing people can do when they make year end contributions is double up on them. For example, this year, instead of making contributions 31 Dec 18, I will make contributions 1 Jan 19, and then next year I will make them 31 Dec 19. That way they will have two years of charitable contributions to report for 2019, which may make the standard deduction feasible.

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Institute of Lutheran Theology • Copyright © 2021 • All Rights Reserved 

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