2014 Vs 2015 For IRA Distribution To Charity As Part Of One’s RMD
Till 12/31/14 one can make a QCD to a charity as part of one’s year-end IRA RMD.
If one is not itemizing deductions in 2014 but will be itemizing them in 2015 when one’s expected taxable income will be about the same as in 2014, perhaps there might be a potential advantage to waiting till Jan. 2015 to make one’s IRA RMD distribution to the charity.
The potential advantage of that delay would depend on whether Congress in 2015 ever extends the QCD provision to an IRA RMD distribution and check made out to a charity in Jan. 2015. If so, that QCD would reduce one’s 2015 AGI and in turn lessen the AGI’s impact on those deductions which are lowered by the AGI.
If Congress does not pass legislation in 2015 extending the QCD provision to a IRA distribution and check made out to a charity in Jan. 2015 as part of one’s 2015 RMD, one could still take it as a 2015 deduction so nothing has been lost.
Q.: Is this correct or what is the error in my thinking that one should wait even though the chances are not promising that Congress will act in 2015 and allow all 2015 RMD IRA distributions to a charity to be qualified as QCD’s?
Permalink Submitted by Alan - IRA critic on Sat, 2014-12-20 04:29
It probably would work out, but of course no guarantees. Major tax reform is a possibility in 2015, which would break the current irresponsible pattern of Congress of doing these retroactive changes in week 50 of the year. And if not, you still could itemize but of course even if your non QCD itemized deductions are at least equal to your standard deduction, the tax savings from itemizing would generally fall short of the QCD, most often due to taxation of SS income. If you do this, I don’t see any rush to do the QCD in January, you could wait until more information goes together later in the year. In the past all QCD extensions have been retroactive to 1/1, but there is always a small risk that the QCD could be extended, but not retroactively, another reason to wait.
Permalink Submitted by fairira on Sat, 2014-12-20 18:17
Alan,Thank you for your reply and thanks even more for your years of intelligent and knowledgeable comments and advice on this site. We all owe you much appreciation.Best holiday wishes.