Month: January 2024

Reducing Taxes with Qualified Charitable Contributions

If you are age 70½ or older, you may be able to exclude a qualified charitable distribution (QCD) of up to $100,000 from your income each year. A QCD is a taxable distribution paid directly from an IRA (other than an ongoing SEP or SIMPLE IRA) to a qualified charity. It cannot be paid to you as the IRA owner.

To take advantage of this tax reducing strategy, you must be at least age 70½ when the QCD distribution to the charity is made. The SECURE 2.0 Act of 2022 did not change the 70½ age to be eligible to make a QCD.

A few features that make a QCD attractive are:

  • A QCD does not affect your income and is tax-free if paid directly from the IRA to an eligible charitable organization.
  • A QCD is available whether you itemize deductions or take the standard deduction.
  • A QCD may also count toward your required minimum distribution for the year.
  • Because a QCD does not count toward income, a QCD does not affect eligibility for certain tax credits that are based on income.

If you would like more information about whether a QCD is a good option for you given your situation, please contact our office. We would be happy to talk things over.

Standard Mileage Rates for 2024

The Internal Revenue Service has issued the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2024, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 67 cents per mile driven for business use, up 1.5 cents from 2023.
  • 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

These rates apply to electric and hybrid-electric automobiles as well as gasoline and diesel-powered vehicles.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Note that you always have the option of calculating the actual costs of using your vehicle rather than using the standard mileage rates.

You can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, you can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

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