Tax Savings

Tax Savings

Tax Savings by Russ Osgood
Did you find out that with the new tax law you no longer have enough deductions to itemize deductions? Here’s a trick that will give you the effect of itemizing your charitable donations. If you are over 70 1/2 you must take Required Minimum Distributions (RMD) from your IRA which are taxable. The tax code contains a provision that you can take up to $100,000 a year from your IRA and donate it to charity without paying any tax on the amouny withdrawn. This gives you the opportunity to take the RMD from your IRA and give it to Mountain View or any other charity and not pay the income tax on it that you would normally have to pay. The effect is that you have avoided paying income tax on all or part of your RMD while making a donation to a charity that you would have made anyhow. This is a win-win situation. There is a caution, however. The payment to the charity must come directly from the custodian of the IRA. Just instruct the custodian to make a check payable to the charity as a credit against your RMD. If you haven’t taken your RMD this year, it’s a great opportunity to save taxes on your 2019 income tax. If you have already taken your 2019 RMD, keep this device in mind in making charitable gifts next year.

If you have any questions, talk to Susie Burley, Rebecca De La Vega, or Russ Osgood of the Permanent Endowment Committee.

Mountain View UMC

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