29 May Will a charitable donation help me qualify for tax savings?

Q. I’m 73 years old and took a required minimum distribution (RMD) from my IRA last year. I also donate a good portion of my income to charities each year. This year, my RMD will put me over the $100,000 income threshold that entitles me to take the full 100% benefit for New Jersey’s pension income exclusion and the Senior Freeze. If I do a qualified charitable distribution (QCD) from my IRA, do I have to report that charitable contribution as income for either program?
— Looking for savings

A. Charitable giving is often used by donors as a way to lower tax liabilities.

Qualified charitable distributions (QCDs) are made directly to eligible charities from IRAs by those who are 70 1/2 or older.

Individuals can contribute up to $100,000 per year, while married couples can contribute up to $200,000.

But unfortunately for you, New Jersey does not have a reduction of income for QCDs from an IRA, said Ken Bagner, a certified public accountant with CLA in Livingston. 

“Therefore you will still be over the limits for the 100,000 threshold and New Jersey Senior Freeze program,” he said. “No legislation has been passed by New Jersey to allow the deduction.”

We recommend you meet with a qualified tax preparer or a financial advisor to take a look at your overall finances to find the most beneficial way to position your finances for the future, and to plan for any tax liabilities.

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This story was originally published on May 29, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.