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Jai Shri Krishna.

Please read this page for information regarding income tax planning associated with mandatory RMD (Required Minimum Distribution) and charity for the year 2023.

This message is very useful to you if you belong to this category:

  • You are over seventy and half years of age and expecting mandatory RMD from your 401(k) or equivalent accounts AND

  • Your itemized deduction will be below the threshold of $27,700 for a married couple filing jointly in 2023 AND

  • You want to make charitable contribution to any charitable institution 501(c)(3) such as Shri Mangal Mandir (a charitable 501(c)(3) institution with tax id 52-12-00666.)

Typically, you will receive your 1099 form from your broker related to RMD and you will pay both federal and state taxes based on your tax bracket. 

If you donate to any eligible institution, if your overall deductions are less than the threshold amount, you will not be able to claim your donation as deductions.

However, per current tax laws, if you instruct you broker to make the same amount of donation to your charitable institution, the following will happen:

  • Broker sends the check directly to the charitable institution with your name on it.

  • Income on your 1099 from the broker will be reduced by the same amount. 

  • AGI and hence your taxable income for your taxes will be reduced by the same amount.

  • You will not pay any taxes on the donated amount.

Hence, it is preferable to make charitable contribution through the broker.

Please call Harshad Parikh, (301) 653 8810 or write if you have any comments or questions.

Please consult your tax advisor before making any decision related to this matter.

Yours Truly
Arvind M Patel, CEO
Shri Mangal Mandir Trust
P.S. Please review this information which is an excerpt from November 2023 issue of “Inside Personal Finance” by Edelman Financial Engine.

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