If you’re considering making charitable donations this year, contributing to a Scholarship-Granting Organization (SGO) could be beneficial. Ohio residents can receive a nonrefundable, dollar-for-dollar tax credit up to $750 (or $1,500 for married couples filing jointly*). This credit is limited by your total Ohio state income tax liability or the amount donated. If your SGO contribution exceeds your Ohio income tax liability, the excess may be reported as an itemized deduction on your federal return.
Additionally, IRA owners, age 70 ½ or older, are eligible to transfer up to $105,000 tax-free directly to the charity of their choice.
Each year, an IRA owner, age 70½ or over when the distribution is made, can exclude from gross income up to $105,000 of qualified charitable distributions. For a married couple, if both spouses are age 70½ or over when the distributions are made and both have IRAs, each spouse can exclude up to $100,000 for a total of up to $200,000 per year. For IRA owners, age 73 or older, these QCDs also count toward the owner’s required minimum distribution (RMD).
QCDs must be made before the end of the calendar year. It is important to note is that QCDs must be made directly by the trustee of the IRA to the eligible charitable organization. The QCD option is available regardless of whether an eligible IRA owner itemizes deductions on Schedule A.
For more information about QCDs, please see this IRS Bulletin.
These are just a couple of many tax-savings opportunities we like to share with our clients. If you would like to discuss either strategy with your accountant, please call the office at 614-891-5423. As always, it is our goal to make your life #LessTaxing!