Tax
Dinse Brief: How 70 ½ Year-Olds Can Make Charitable Distributions Directly From a Retirement Account and Receive a Tax Benefit
Malory Lea and Dan Sharpe
Charitable contributions have long been tax-favored. Federal and Vermont taxpayers who itemize their deductions reduce their Federal and Vermont taxable income with contributions to United Way, American Red Cross, churches and synagogues, and other charitable, religious and educational organizations. After taking into account the state and Federal deductions, a charitable gift of $1,000 by a Vermont taxpayer in 2017 might have “cost” only $700 as a result of a reduced overall income tax liability of $300.
For 2018, the out-of-pocket cost of charitable contributions will rise significantly. The dramatic increase in the Federal standard deduction from $12,700 to $24,000 for married, joint tax filers and from $6,350 to $12,000 for single taxpayers means that many taxpayers will no longer itemize deductions. More taxpayers will no longer receive any tax benefit from making charitable contributions. While there are many reasons to be charitable, a tax deduction provides a valuable monetary incentive for taxpayers to make these contributions. Charitable organizations are understandably worried that this increase in the standard deduction will reduce donations.
Individuals who have reached age 70 ½ and have individual retirement accounts (“IRAs”) are required to take minimum distributions from their IRAs. The “required minimum distribution” or “RMD” is often calculated by the trustee or custodian of an IRA. The amount is based on the immediately prior year-end value of the account and the IRA-holder’s age.
A special rule for IRAs applies to charitable distributions made after the account holder reaches age 70 ½. Distributions made directly by an IRA trustee or custodian to a tax-qualified charity for an account-holder who has reached age 70 ½ are “Qualified Charitable Distributions” or “QCDs.” QCDs are not only excluded from a taxpayer’s gross income, but they are included in meeting the required minimum distribution from your IRA. Double counting is not permitted. To the extent a QCD is excluded from gross income, a charitable deduction may not also be claimed.
This special rule, limited to $100,000 annually, allows charitably-minded individuals subject to the RMD rules to avoid Vermont and Federal income taxes on the charitable distribution, avoid the loss of an itemized deduction that might result from the increased standard deduction, and meet their RMD requirement.
If you are subject to the RMD rules for your IRA for 2018 and want to take advantage of the special QCD rules, you must act in concert with your IRA trustee or custodian in advance of the year end. Contact Malory Lea at mlea@dinse.com or 802-864-5751 for more information or assistance.
Best Lawyers Recognizes Twelve Dinse Attorneys
Dinse, Knapp & McAndrew announces that twelve of its attorneys were recently selected by their peers for inclusion in the The Best Lawyers in America® 2015 (Copyright 2012 by Woodward/White, Inc., of Aiken, S.C.) in eighteen different practice areas. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Because Best Lawyers is based on an exhaustive peer-review survey in which more than 36,000 leading attorneys cast almost 4.4 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”
The practice areas and the attorney(s) listed in each area are as follows:
Commercial Litigation: Ritchie E. Berger, Karen McAndrew
Corporate Compliance: David Gurtman
Corporate Governance Law: Brian Murphy
Corporate Law: Jeffrey J. McMahan, Brian R. Murphy
Employment Law – Management: Amy M. McLaughlin, Jeffrey J. Nolan
Immigration Law: Leigh Polk Cole
Litigation – Construction: Karen McAndrew
Litigation – Intellectual Property: Shapleigh Smith, Jr.
Litigation – Labor & Employment: Amy M. McLaughlin
Medical Malpractice Law – Defendants: Ritchie E. Berger
Mergers & Acquisitions Law: Brian R. Murphy
Non-Profit / Charities Law: Brian R. Murphy
Personal Injury Litigation – Defendants: Ritchie E. Berger, Karen McAndrew
Product Liability Litigation – Defendants: Shapleigh Smith, Jr.
Real Estate Law: Austin D. Hart, Molly K. Lebowitz
Tax Law: Mark A. Langan
Technology Law: Jeffrey J. McMahan
Trusts and Estates: Mark A. Langan
Dinse, Knapp & McAndrew is one of the largest and most respected law firms in Vermont and northern New York. At Dinse, client service is our highest priority. For more information, please visit our website at www.dinse.com.
Best Lawyers Recognizes Twelve Dinse, Knapp & McAndrew Attorneys
Dinse, Knapp & McAndrew announces that twelve of its attorneys were recently selected by their peers for inclusion in the The Best Lawyers in America® 2016 (Copyright 2012 by Woodward/White, Inc., of Aiken, S.C.) in nineteen different practice areas. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Because Best Lawyers is based on an exhaustive peer-review survey in which more than 36,000 leading attorneys cast almost 4.4 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”
The practice areas and the attorney(s) listed in each area are as follows:
- Commercial Litigation: Ritchie E. Berger, Karen McAndrew
- Corporate Compliance Law: David Gurtman
- Corporate Governance Law: Brian Murphy
- Corporate Law: Jeffrey J. McMahan, Brian R. Murphy
- Education Law: Jeffrey J. Nolan, Karen McAndrew
- Employment Law – Management: Amy M. McLaughlin, Jeffrey J. Nolan, Karen McAndrew
- Immigration Law: Leigh Polk Cole
- Litigation – Construction: Karen McAndrew
- Litigation – Intellectual Property: Shapleigh Smith, Jr., Karen McAndrew
- Litigation – Labor & Employment: Amy M. McLaughlin
- Medical Malpractice Law – Defendants: Ritchie E. Berger
- Mergers & Acquisitions Law: Brian R. Murphy
- Non-Profit / Charities Law: Brian R. Murphy
- Personal Injury Litigation – Defendants: Ritchie E. Berger, Karen McAndrew
- Product Liability Litigation – Defendants: Shapleigh Smith, Jr.
- Real Estate Law: Austin D. Hart, Molly Langan
- Tax Law: Mark A. Langan
- Technology Law: Jeffrey J. McMahan
- Trusts and Estates: Mark A. Langan
Best Lawyers Recognizes Five Dinse Attorneys as Burlington Best Lawyers – Lawyer of the Year
Best Lawyers has named each of the following Dinse attorneys as “Lawyer of the Year” in their respective practice areas for 2015 in the Burlington area. Only a single lawyer in each specialty in each community is being honored as the “Lawyer of the Year.” Best Lawyers compiles its lists of outstanding attorneys through exhaustive peer-review assessments they conduct with thousands of leading lawyers each year.
Ritchie E. Berger
Medical Malpractice Law – Defendants
Mr. Berger is head of the Litigation Section of the firm and is considered one of Vermont’s premier trial lawyers. He concentrates on the defense of complex civil litigation throughout Vermont and New England. He is a Fellow of the American College of Trial Lawyers, Past-Vermont State Chair, and a member of the American Board of Trial Advocates, Past-President of Vermont Chapter.
Mark A. Langan
Tax Law
Mr. Langan is head of the firm’s trust and estates practice. Mr. Langan’s practice involves the restructuring of estates and companies to reduce estate, gift, and income taxes at the federal and state levels and to provide creditor protection for clients in high risk occupations. His work also includes tax planning for business reorganizations including mergers, consolidations and recapitalizations, and tax planning for partnerships including formation, distributions and dissolutions.
Karen McAndrew
Commercial Litigation
Ms. McAndrew is one of Vermont’s leading trial lawyers. She headed the firm’s litigation practice for many years, and was named a Fellow of the American College of Trial Lawyers in 1997. She has successfully tried many complex civil cases in state and federal courts, and handled numerous appeals in the Vermont Supreme Court and the Second Circuit Court of Appeals. She has a particular concentration in higher education law.
Amy M. McLaughlin
Litigation – Labor and Employment
Ms. McLaughlin leads the firm’s Employment Law Group. In her practice, she regularly provides guidance on compliance issues, assists employers with the development and implementation of workplace policies and procedures, performs workplace investigations, conducts employment law trainings, and defends employers in connection with administrative charges, governmental audits and civil litigation.
Brian R. Murphy
Corporate Law
Mr. Murphy is a corporate and tax attorney concentrating in counseling closely-held businesses and their owners and nonprofit organizations. He is active in counseling clients on formation and structuring issues (including decisions with respect to the selection of the proper entity for effecting business and investment transactions), executive compensation and 409A compliance, tax planning, and representing clients before the Internal Revenue Service and the United States Tax Court.
Dinse, Knapp & McAndrew is one of the largest and most respected law firms in Vermont and northern New York. At Dinse, client service is our highest priority.