Well folks, we are in the middle of the holiday season. Thanksgiving is gone and Christmas, Hanukkah, Kwanza and the Winter Solstice (for my Druid friends) are on the horizon. After that, we say goodbye to 2017 and welcome 2018.

It's this time of year that people tend to become more giving. Whether it's a holiday present for a loved one or a donation to a favorite charity, people tend to be more giving and charitable during the month of December.

Other things that tend to come up this time of year are taxes. On Dec. 31, the 2017 tax planning window shuts. I know you may still be able to make an IRA contribution after the first of the year, but traditional tax planning ends at the end of the year.

For most of us, a charitable donation is our tax planning. We write a check to our favorite charity and get a receipt. The receipt is then given to our accountant and voila; we are both charitable and tax savvy.  

Those of you who are age 70 1/2 and have an IRA subject to Required Minimum Distributions (RMD) have an attractive option for your end of year charitable gifting. A Qualified Charitable Distribution (QCD) offers an opportunity to satisfy your RMD requirement and be charitable.

Essentially, a QCD is a charitable contribution that goes directly from your IRA to a 501(c)(3) charity. In other words, you can direct all or a portion of your RMD directly to the qualified charity. You don't get the charitable deduction but you also don't pick up the RMD as ordinary income on your tax return.

QCDs make a lot of sense for high net worth clients but they can offer benefits to the rest of us too. For example, if you make charitable contributions but can't claim the deduction because you take the standard deduction rather than itemize, a QCD allows you to get a tax benefit because you just reduced your taxable income. For those of you who are concerned with Social Security benefits being subject to income tax, a QCD could reduce your adjusted gross income and make it less likely that your Social Security benefits are subject to income tax.

These things can be complicated and the money has to leave your IRA before the end of the year. Remember that not all charities qualify for a QCD so it may take a few phone calls and some research. Also, if you touch the money at any point, these things fail so it's important for the contribution to go directly to the charity. Don't pick up the check and deliver it to the charity. Let the IRA custodian handle everything.

If it appears a QCD is for you, contact your accountant and financial advisor to start the ball rolling. It will take some te to arrange for a QCD so it's best to not wait until the very end of the month. Remember that Dec. 31 is only a few weeks away so get moving sooner rather than later.

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Christopher W. Yugo is an attorney in Crown Point. Chris’ Estate Planning Article appears online every Sunday at www.nwi.com. Address questions to Chris in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Chrisyugolaw@gmail.com. Chris’ information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.

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