The US Government allows a taxpayer who is over age 70 1/2 (don’t ask me why it can’t just be age 70) to donate up to $100,000 from his IRA to charity.

Why is this a good thing?

A taxpayer who is over age 70 1/2 is required to take money from his IRA and include it in his taxable income.  If that same taxpayer makes a donation to a charity and doesn’t itemize, then he doesn’t get to enjoy a deduction for that donation.  Thus, he would have income with no offsetting deduction.

This provision allows that same taxpayer to send the money directly from his IRA to the charity and avoid putting the IRA income on his tax return (because he never touched the money – it went directly from his IRA to the charity)  In effect, the amount that goes from his IRA to the charity is deducted from his income, as if he had itemized.

In addition, when the money goes directly from the IRA to the charity, it potentially could allow the taxpayer to pay less tax on their social security earnings, and well as enjoy other positive tax effect.

…something worth considering if you are over age 70 1/2.