Give Through Your IRA or Securities

If you’re over the age of 70 1/2, you’re required to take minimum distributions each year from your IRA, and those distributions are generally taxable.

The charitable rollover law allows you to transfer assets directly from your IRA to a charity. Whatever amount you transfer reduces the amount you’re required to withdraw for yourself.

That means if you are required to withdraw funds from your IRA, but instead donate that amount directly to charity, you may reduce your taxable income while supporting a cause you care about.

You won’t receive a separate charitable deduction for the amount donated this way. However, giving directly from an IRA may still be more beneficial than taking the distribution yourself and then making a donation, because it can result in a lower adjusted gross income.

A lower adjusted gross income may help you avoid taxes on Social Security benefits, reduce Medicare premiums, limit the 3.8% surtax on investment income, and improve eligibility for other deductions and credits.

Donating from an IRA may also be especially beneficial if you would not otherwise qualify for a charitable deduction, either because you do not itemize or because of charitable deduction limitations for higher-income taxpayers.