The new tax law reinstates so-called charitable IRA rollovers. As was the case in the past, this provision applies only to people who are at least 70-1/2 years old. If you or your parents are in this category, donations can go directly from an IRA to charity.
With these IRA rollovers, the donor gets no income tax deduction. On the plus side, eligible taxpayers can take money from their IRA without recognizing taxable income. Even though there is no taxable income, these withdrawals count towards required minimum distributions.
Therefore, charitable IRA rollovers may be very appealing to seniors who don’t itemize deductions on their tax returns. Such seniors get no tax benefit from a charitable contribution so that deduction won’t be missed. Donating IRA money allows them to reduce or avoid taxable IRA distributions.
What’s more, reducing or avoiding taxable IRA distributions reduces adjusted gross income (AGI) on a tax return. With a smaller AGI, a taxpayer might save money elsewhere on his tax return. For example, more losses from investment real estate might be deductible, more medical expenses might be deductible, and fewer taxes might be owed on Social Security ben
