Informational Note on Tax Benefits for Members Supporting AARO

How donations to Friends of Fondation de France could qualify for 501(C)(3) deductions.

AARO has created this note to help you understand how U.S. tax benefits that may be available to donors supporting AARO by making a donation to Friends of Foundation de France. Please note that only U.S. tax benefits would be possible, not any foreign tax benefits.

This note is provided for informational purposes only and is not intended nor should be construed as legal or tax advice. Before considering a donation to AARO you should consult a tax professional.

Below please find out how your support for AARO could potentially reduce your U.S. income tax liability starting with your 2026 tax return.

• Summary
• Donations While Taking the Standard Deduction
• Donations By Those Who Itemize
• Donations From Your IRA

Summary

• If you take the standard deduction, you can contribute up to $1000 (single filers) or up to $2000 (married filing jointly).
• If you itemize, you could deduct cash gifts up to 60% of Adjusted Gross Income (AGI) and appreciated assets up to 30% of AGI, above a 0.5% exemption. Donating appreciated securities can also eliminate capital gains tax on the growth.
• You can donate from your IRA and reduce your AGI, and therefore your taxable income. A donation directly from your IRA will count toward your required minimum distribution (RMD).

Donations While Taking the Standard Deduction

Under the “One Big Beautiful Bill Act” signed into law on July 4. 2025, a new above-the-line charitable deduction for non-itemizers was established. Starting with 2026 tax returns, taxpayers who do not itemize will be able to claim a charitable contribution deduction up to:

• $1,000 for single filers
• $2,000 for married filing jointly

This deduction is separate from the standard deduction — so you could still take the standard deduction plus this charitable deduction (up to the caps). The charitable contribution deduction is only for cash contributions to public charities. Friends of Fondation de France is a public charity.

Donations By Those Who Itemize

If you itemize deductions, you may deduct cash contributions to qualified public charities up to 60% of your Adjusted Gross Income (AGI). You may also deduct long-term appreciated assets, such as stocks or mutual funds held for more than one year, up to 30% of AGI. Donating appreciated securities can be highly tax efficient as you can receive a deduction for the full fair market value while avoiding capital gains tax on the asset appreciation.

Only the portion of your total charitable contributions that exceeds 0.5% of your AGI is deductible. You can maximize the impact of your tax deduction by grouping multiple years of charitable contributions into one year to exceed your standard deduction.

Special Note for Those with Foreign Income and Minimal U.S. Source Income

If you claim the Foreign Earned Income Exclusion (FEIE), the excluded foreign earned income is removed before AGI is calculated. As a result, your AGI is lower than it would be without the exclusion. The 0.5% exemption mentioned above is calculated as 0.5% of this lowered AGI. Therefore, the FEIE reduces the dollar amount of that “floor.” In practical terms, that means that more of your donations generate a tax benefit.

However, the tax benefit is not automatic as it depends on whether you still have enough U.S. taxable income after applying the FEIE and any foreign tax credits. If your U.S. tax liability is near zero after FEIE and credits, a charitable deduction will provide little to no tax benefit.

Donations From Your IRA

For retirees, a Qualified Charitable Distribution (QCD) can be one of the most tax-efficient ways to support AARO.

What is a QCD?

A QCD allows an individual age 70½ or older to transfer funds directly from a traditional IRA to a qualified 501(c)(3) organization. Directing IRA funds straight to the qualified 501(c)(3) organization through a QCD provides a tangible tax advantage because the distribution is never included in income. This can create powerful tax benefits when no tax was paid on the deductible contributions when they went into the IRA, no tax was paid on the growth inside of the account, and no tax would be owed on the amounts donated to the charity, if structured as a QCD.

QCDs Reduce Taxes on RMDs

In addition, QCDs can also reduce an IRA owner’s required minimum distributions (RMD) that would otherwise be fully taxable. RMDs usually begin at age 72, 73, or 75, depending on your date of birth. For example, if a retiree has a $30,000 RMD and directs $10,000 to charity as a QCD, the taxable portion of the RMD is reduced to $20,000, lowering their income taxes.

QCDs Reduce the AGI

As a result, the QCD reduces your Adjusted Gross Income (AGI) because the distributed amount is excluded from income, giving you what is effectively an “above the line” benefit. A lower AGI can have ripple effects throughout a tax return as many surtaxes and phaseouts are keyed to AGI or modified AGI. A lower AGI may:

• Reduce taxation of Social Security benefits;
• Help avoid or lessen Medicare premium surcharges (IRMAA);
• Reduce exposure to the 3.8% Net Investment Income Tax (the Affordable Care Act tax);
• Lower capital gains bracket thresholds
  • Long-term capital gains are taxed at 0%, 15%, or 20% depending on taxable income. Lower AGI can help keep total taxable income within the 0% or 15% capital gains bracket, avoiding a jump to the 20% rate; and/or
• Positively affect other deduction and credit phaseouts which are tied to modified AGI.

QCDs v. Charitable Deductions

A traditional charitable deduction, as discussed above, provides the greatest tax benefits to those who itemize deductions. Itemized charitable deductions are claimed below the AGI line. This means that they reduce taxable income but do not lower AGI.

A QCD is not claimed as an itemized charitable deduction. Instead, the distribution is excluded from gross income, which means the taxpayer may still claim the standard deduction. The QCD exclusion is often better than a deduction for many as it reduces AGI. This is especially important for overseas Americans who do not have the typical expenses which justify itemizing, such as state taxes and mortgage interest.

Structuring is Important – Timing and Process

The donor must be at least age 70½ at the time of the transfer and the funds must move directly from the IRA custodian to the qualified 501(c)(3) organization. There are limits to how much you may contribute. You cannot double dip: If you exclude a QCD from income, you cannot also claim it as an itemized charitable deduction.

QCDs need to be structured properly to ensure the tax breaks (as to timing, proof of donation, etc.) so you need to confer with your tax return professional. See here for more about QCDs.

This information is for general educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and change over time, and their application can vary based on your individual circumstances, including your residency status and the interaction of U.S. and foreign tax rules. Before acting on any strategy discussed here, such as making Qualified Charitable Distributions (QCDs) or claiming charitable deductions, you should consult with a qualified tax professional or your own tax preparer who can review your specific situation and provide personalized advice.AARO is not responsible for any action taken based on information in this note.