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IRA Charitable Distributions – If You’re Less Than Age 70½


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We discussed the IRA Qualified Charitable Distribution (QCD) option for folks age 70½ or better in other articles. It’s possible from those articles that you got the impression that if you are younger than 70½, you are not able to make charitable contributions with money from your IRA. Nothing could be further from the truth! You can always make charitable contributions of any money you wish… the question is, what will such a move do for you tax-wise?

First of all, even though the age for RMD has increased to 72, the age for Qualified Charitable Distributions remains at 70½, so don’t get these two confused.

If you’re under age 70½

You can make charitable contributions from your IRA account – the only problem is that you must first count the distribution from your IRA as income, and then you account for the charitable contribution among your Schedule A Itemized Deductions. The end result is the same, right? Au contraire, mon ami.

The problem is that, by having to count your IRA distribution as income, you will increase your Adjusted Gross Income (and therefore your Modified AGI), both of which can have a significant impact on other items on your tax return.


Let’s run through an example: you’re age 72, have an IRA worth $50,000, and you want to contribute the entire amount to your favorite charity. Your other income, along with your spouse’s income, totals $70,000. Included among your tax return items is $10,000 in medical expenses, along with other deductions (real estate tax, home mortgage interest, etc.) amounting to $15,000. You had no other charitable contributions for the year.

Under the QCD rules, your AGI is $70,000. Your itemized deductions amount to $19,750 – because your medical expense deduction is limited to the amount over 7.5% of your AGI. Since 7.5% of $70,000 is $5,250; we subtract that amount from $10,000 and come up with $4,750, which we then add to the rest of your itemized deductions for a total of $19,750 in deductions. Since the standard deduction for a couple of this age is $28,700, you’d use the standard deduction.

Subtracting the standard deduction from your AGI ($70,000 minus $28,700) equals $41,300. This is your taxable income, assuming you don’t have any other deductions such as QBI. Tax on this amount is $4,545 (2022 tax tables).

If you were younger than age 70½, your AGI is $120,000. This because the IRA distribution of $50,000 is added to the rest of your income. So if you were age 65 for example, itemized deductions are now $66,000, because your medical expense deduction was reduced to $1,000 ($120,000 times 7.5% equals $9,000, subtracted from $10,000 equals $1,000). We add the rest of your itemized deductions (including the $50,000 charitable contribution deduction) and come up with $66,000 ($15,000 plus $1,000 plus $50,000).

Subtracting the itemized deductions from your AGI equals $54,000, which is your taxable income, absent any other deductions. Tax on this amount is $6,069 (2022 tax tables).

Even though you had a significant itemized deduction amount, you’re still better off if you can use the QCD. Under these rules, by not using a QCD you paid $1,524 more in taxes than you would have if you were 70½ or older and used a QCD, with otherwise all of the same circumstances. So, while it’s possible to make a charitable contribution from your IRA account when you’re younger, it’s more costly to do so. It’s also possible to make charitable contributions after age 70½ without using the QCD option, but you’re throwing tax money away – might as well take advantage of this option!

Other items affected by AGI

There are several items on your tax return that are impacted by the amount of your AGI. The AGI gets increased when you take a distribution from your IRA, unless you have the distribution treated as a QCD. Listed below are some of the more common items that are impacted:

  • taxable amount of Social Security (or Railroad Retirement) benefits
  • allowable losses from rental real estate activity with active participation
  • deductible traditional IRA and spousal IRA contributions
  • ability to contribute to a Roth IRA
  • miscellaneous itemized deductions, including non-reimbursed employee job expenses
  • and a number of miscellaneous credits

These and many other components of your tax return can be impacted by an increase in your AGI. By using the QCD option, you are avoiding this increase to AGI, which can limit these other tax benefits.

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