How to Save on Your Taxes

Are you looking to start the year off right by supporting Ochsner’s mission by making a tax-savvy donation? In a few weeks, owners and beneficiaries of individual retirement accounts (IRAs) will learn what their required minimum distributions are going to be for 2022. By acting early in the year, you can reduce your required minimum distribution tax bill through a qualified charitable distribution.

For people taking a required minimum distribution in 2022, give to charity with a qualified charitable distribution first. If you take a required minimum distribution before the qualified charitable distribution, it will be taxable, and can’t be offset with a qualified charitable distribution given later in the year.

The IRS has the “first dollars out rule,” which means that the first funds distribution from an IRA will be deemed to satisfy the required minimum distribution. To reduce income with a qualified charitable distribution, it should be the first IRA distributions made directly to the charity before taking any required minimum distribution for the year.

So, for qualified charitable distributions, make your charitable gifts at the beginning of the year instead of the end. Look at this example:

Catherine, age 75, has an IRA with the required minimum distribution determined to be $10,000 for 2022.

	Scenario 1	Scenario 2
February	She takes an RMD of $10,000	She sends a QCD of $10,000 directly to Ochsner
December	She sends a QCD of $10,000 directly to Ochsner	She doesn’t need to take an RMD in 2022
Total IRA withdrawal	$20,000	$10,000
End tax result	Catherine has $10,000 of taxable income and the $10,000 QCD to Ochsner is excluded from her 2022 income	Catherine has made a gift of $10,000 to Ochsner which satisfied the RMD and it is not taxable income to her

If you would like to know if you are eligible to make a charitable gift with a qualified charitable distribution this year, see the requirements below:

You must be 70½ or older (even though the required minimum distribution age was raised to 72)

Have not made a tax-deductible contribution to your IRA

Qualified charitable distributions cannot be made from 401(k)s and 403(b)s

Must go directly to a qualified charity like Ochsner (but not a donor-advised fund)

Can be up to $100,000 per person annually

The QCD is excluded from income and can lower adjusted gross income

Don’t have to itemize; QCD benefit is in addition to the standard deduction

Check off your year-end to do list early in 2022. Help Ochsner save and change lives now.

Make your donation to Ochsner with a qualified charitable deduction today,

Make your donation to Ochsner with a qualified charitable deduction today and start the year off with a tax-smart choice that can potentially help you save on taxes.

If you have any questions, please do not hesitate to contact me at [email protected] or 504-842-6585.

Lower Your Tax Bill and Help a Worthy Cause

Most people don’t itemize. The Coronavirus Aid, Relief and Economic Security (CARES) Act is a way to help charities get through the pandemic and provide standard-deduction donors with a bigger tax break.