A Message About Giving from a Bar Member

Dear Fellow Senior Members of the Bar Association:

I write to my fellow bar members to urge you to consider making charitable donations to help those in need during this difficult public health crisis.

While meeting with my accountant, it has come to my attention that there is a new way to make charitable donations available only to those of us over 70½.  These are called QUALIFIED CHARITABLE DISTRIBUTIONS (QCDs). As you may know, the Tax Act of 2017 increased the Standard Deduction to $24,000 for married couples filing jointly, $18,000 for Heads of Households and $12,000 for others.  As a result, many of us are not itemizing deductions anymore.  A further disincentive for itemizing is the $10,000 limit on the State and Local Taxes deduction.

With these changes, however came a new Regulation that allows those with Traditional Individual Retirement Accounts to cause direct distributions to be made from those accounts by their IRA Trustees to qualified IRS non-profit entities under 501 (c)(3) and pay no federal income tax on those distributions.  In addition, those distributions can count as that individual’s Required Minimum Distribution, meaning you can meet that requirement without paying taxes on the donation. These benefits are not available for those with 401k Plans.

As I understand it, the trustee will include those QCDs on the Form 1099-R that they will file with your other taxable distributions.  Thereafter, it is up to the individual taxpayer to make the appropriate entries on his or her Form 1040, so that the QCD contributions are excluded from his or her taxable income.  As usual, you should get and retain a letter from the charitable organization acknowledging the donation.  As I am neither a tax lawyer nor an expert in this area, it is important that you speak with your individual accountants, attorneys, and IRA Trustees to ensure compliance with all of the applicable rules and regulations to take advantage of this great program.

As such, I urge my fellow seniors to consider such donations (distributions) to local legal services agencies in our Western New York region.  Many of these local non-profit legal services agencies are hard at work, serving those individuals who are hit hardest by the pandemic, including those with disabilities, low income, and advanced age.  By banding together and supporting these agencies, we can uphold the safety and well-being of these vulnerable people.

As lawyers, we now stand in a unique position to assist and support those clients who are hit especially hard by this recent health crisis.  Last year, you may have read about lawyers who jumped into the breech to help dozens of people facing tax foreclosures from losing their homes.  Supporting and raising awareness for legal services agencies that are working on the forefront of this recovery will be more crucial now than ever.  I am confident that as a community, we can band together to support our fellow colleagues and our community’s most vulnerable people.  Thank you for your time and consideration.

Very truly yours,

James D. Gauthier, Esq.     

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