I know that I can use part of my RMD sent directly to a charity. Doing this will reduce my taxable RMD. If instead, I send part of the RMD from my checking account and use it as a charitable deduction.
Which of these would be the better choice?
Simple answer: have the IRA custodian send the money directly to the Charity (a QCD -Qualified Charitable Distribution). It directly reduces your AGI (adjusted Gross income) as well as your taxable income. Lower AGI usually makes you more eligible for other tax benefits. The QCD comes directly off you income before taxable income is determined.
A charitable deduction from your checking account is only an itemized deduction. You must have sufficient other itemized deductions, to exceed you standard deduction before you get any tax benefit from a charitable deduction. If your total itemized deductions are close to the standard deduction, you may not get the full benefit of making a charitable contribution from your checking account.
But, taxes are complicated. The only way to be absolutely sure is to calculate it both ways and compare. If you currently use the standard deduction, then the QCD is almost surely your best option.
Simple answer: have the IRA custodian send the money directly to the Charity (a QCD -Qualified Charitable Distribution). It directly reduces your AGI (adjusted Gross income) as well as your taxable income. Lower AGI usually makes you more eligible for other tax benefits. The QCD comes directly off you income before taxable income is determined.
A charitable deduction from your checking account is only an itemized deduction. You must have sufficient other itemized deductions, to exceed you standard deduction before you get any tax benefit from a charitable deduction. If your total itemized deductions are close to the standard deduction, you may not get the full benefit of making a charitable contribution from your checking account.
But, taxes are complicated. The only way to be absolutely sure is to calculate it both ways and compare. If you currently use the standard deduction, then the QCD is almost surely your best option.
A lower AGI may also trigger a reduction in taxable Social Security benefits and/or future Medicare premiums
I can't imagine any scenario where it would be advantageous to claim a deduction for the contribution rather than treat the contribution as a QCD.
You'll always want to have the contribution transferred by the IRA custodian directly to the charity, if possible. You don't have to decide between treating it as a QCD and claiming it as a deduction until you prepare your tax return.
It sounds like OP wants to keep part of the RMD, and donate part. But that can still be done via a direct transfer to the charity.
@parris Just be aware that not all states recognize QCD's, so you may still owe state taxes.