Do i pay texes on my IRA gift to charity if it does not exceed 50% of my AGI? For example, if I (age 60) have 140,000 AGI and I give 100,000 from my IRA, will I pay any tax on the gift?

[Rick99]

Pub 526 implies that cash contributions can be up to 60% of AGI to qualified organizations, but it does not directly address IRA distributions...

[dmertz · Accepted solution]

Since you are under age 70½, this is not a QCD and must be included in income.  A fully taxable $100,000 IRA will add to your $140,000 AGI from other income and the charitable contribution will appear as a deduction on Schedule A.

Taking a fully taxable distribution from your IRA and making a fully deductible charitable contribution of an equal amount will increase your tax liability if the amount on Schedule A without the charitable deduction is less than the standard deduction.

[Critter]

Ok ... IF  you make a QCD directly from the IRA to the charity then you will report the distribution (reported on the 1099-R form)   on your return in the income section  HOWEVER it will not be taxable  and  it will NOT be reported on the Sch A THEREFORE the distribution/contribution cannot be limited by the Sch A limitations.  

However you are not old enough to make a QCD ...   https://smartasset.com/retirement/all-about-qualified-charitable-distributions

[Rick99]

Thanks! Since my standard deduction is met by previous Schedule A deductions prior to the IRA distribution, the maximum charitable contribution to qualifying organizations is 60%.  I do not see this addressed in any IRS publication - do you?

[Critter]

Read the rules in pub 526 starting on page 15  and then you can use the worksheet on page  17  OR  simply use the program to calculate the allowed deduction ... any unallowed will be carried forward ...

https://www.irs.gov/pub/irs-prior/p526--2018.pdf

[Anonymous]

it also depends on why type of charity you give the money to.   public charities generally 60%.  private foundations 20% .   so you have to know what type of charity you are giving to.  

[dmertz · Accepted solution]

It's simply the result of adding an amount of income to AGI and being able to subtract it back out the same amount as an itemized deduction.  Until itemized deductions reach the level of the standard deduction, additional itemized deductions don't subtract back out.

Be aware, though, that that my answer does not say that once your other itemized deductions reach the standard deduction that doing a taxable IRA distribution followed by an equal deductible charitable contribution won't increase tax liability.  It's entirely possible that there is a side effect of increasing AGI that is not offset by the deduction.  For example, if you are married filing separately and made a Roth IRA contribution, the increase in AGI would cause your Roth IRA contribution to become subject to a 6% excess-contribution penalty unless the excess contribution was corrected.  There are numerous other things that depend on AGI.  The difference if you are over age 70½ is that money (up to $100,000) transferred to charity as a QCD would not add to AGI in the first place and the QCD would not induce any AGI-dependent side effects.

To really know how an IRA distribution and equal charitable contribution would affect your tax return you would have to simulate your entire tax return without the IRA distribution and charitable deduction, then add these two and see the net effect on tax liability.  Also, don't forget to check the effect on state taxes.