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Tax-Free IRA to Charity Distributions
A provision permits taxpayers age 70½ and over to make direct distributions (up to $100,000 per year) from their Traditional or Roth IRA account to a charity. The distribution is tax-free, but there is no charitable deduction. This provision can be very beneficial to taxpayers who have social security income and/or do not itemize their deductions.The key benefits of making a direct charitable IRA distribution lie in the fact that the distribution:
(1) Is not included in the taxpayer’s income for the year,
(2) Counts toward the taxpayer’s minimum required distribution for the year if any, and
(3) Does count as a charitable contribution for the year (although not a deductible contribution).
How does a taxpayer benefit from this provision?