state tax credit benefit from direct contribution to a charitable organization from the taxpayer’s IRA
Ed has said that a transferor cannot receive any benefit (such as a museum membership) when the transferor makes a direct contribution from his IRA to a charitable organization.
Can the transferor receive a state tax credit from the charitable organization if the contribution (that was the basis of the state tax credit) came from the transferor’s IRA? (The state awards a limited amount of tax credits to a charitable organization based upon an application to the state by the organization. The tax credit is usually 50% of the amount of the contribution to the charitable organization. Assume the transferor is > 70 1/2 years old and the transfer otherwise qualifies).
Is your answer different as a result of the proposed regulations that were issued yesterday (to be published Monday) to deal with charitable contribution deductions and the issuance of state tax credits?
Permalink Submitted by Alan - IRA critic on Sun, 2018-08-26 00:12
Permalink Submitted by Alan - IRA critic on Sun, 2018-08-26 00:47
If a given state tax credit program does not exclude QCDs from being used to qualify for state tax credits, they should qualify. I looked into this with respect to the charitable state tax credits for AZ, which have relatively low caps but a QCD should qualify for these credits up to the cap. Qualifications for state tax credits of course will be subject to major differences from state to state. I don’t see the recent IRS guidance regarding recharacterizing state taxes as charitable contributions as having any effect on this.