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Your Tax Questions, Answered: Can I Still Use the IRA Qualified Charitable Distribution?

By Motley Fool Staff - Feb 5, 2018 at 7:10PM

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The Republican tax overhaul changed and removed quite a few deductions. Is your favorite still legal?

At the Motley Fool Answers podcast, we can tell a lot about what's on our listeners' minds by looking into the mailbag, and no surprise, right now, the topic of interest is starting to be taxes. The W-2s are rolling in, people are beginning to anticipate their tax refunds, and they're also beginning to stress about the process involved in getting them.

So for this episode, hosts Alison Southwick and Robert Brokamp recruit a special guest to sort out some of those concerns: Megan Brinsfield, head of financial planning for Motley Fool Wealth Management, who's also a CFP and CPA. First on the docket: A listener who wants to know the status of the rule that has allowed contributions sent directly to a charity from your IRA to be deducted, even if you don't itemize.

A full transcript follows the video.

This video was recorded on Jan. 30, 2018.

Alison Southwick: The first question is coming to you from Ray. Ray wants to know, "Will the qualified charitable distribution still be in effect for the 2018 tax year? This is the rule that allows charitable contributions to be deducted, even without itemizing, if they are sent directly from an IRA to the charity. Is that provision still in the new tax law?"

Megan Brinsfield: The good news is that that provision was not touched in the new tax law. In fact, a few years ago, Congress made that provision permanent, or as permanent as anything is...

Robert Brokamp: Right. Exactly.

Brinsfield: ... so that qualified charitable distribution is still available. One thing for Ray to keep in mind is that it's not necessarily a deduction. It's just that the required minimum amount is not included in your income, and it's also not a deduction. It's just completely outside of your tax return.

Brokamp: So, instead of taking the money out of your IRA and paying taxes, and then donating to get a deduction, it just goes straight to the charity and you don't have to worry about paying taxes on a withdrawal.

Brinsfield: Exactly.

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