Last Shot at IRA Gifts to Charity for '12

By Ken Berry   

The IRS is reminding senior citizens of an eleventh-hour reprieve granted by the new American Taxpayer Relief Act of 2012 (ATRA). An older individual can still pull off a tax-free, IRA-to-charity transfer of funds . . . but only if he or she acts by January 31 (IR-2013-6).
As a result, you might want to contact clients who may be interested in this unique tax-saving opportunity.
Here are the details: Under prior law, an IRA owner age 70½ or older could transfer up to $100,000 annually from an IRA to a qualified charitable organization without paying any tax on the distribution. (The annual exclusion limit was effectively doubled to $200,000 for a married couple.) The distribution wasn't deductible either – so it amounted to a "tax wash" – but this was a good way for older taxpayers to give to charity without exhausting other funds. Even better, the payout counted as a required minimum distribution (RMD).
Unfortunately, however, this tax break – which first became available in 2006 – officially expired December 31, 2011. Now, ATRA revives this tax law provision, retroactive to January 1, 2012. And clients still have a little time to beat the deadline for 2012, even though the year is over.

There's more on AWEB!

Do you have colleagues or clients who might like to receive the free AccountingWEB newsletter?
• Practice
• Education
• Tax
• A&A
• Technology
• Wealth Management

Under ATRA, a qualified taxpayer can make either of these two elections:

1. Have a distribution made in January 2013 treated as if it had been made on December 31, 2012.
2. Treat any portion of a distribution from an IRA to the taxpayer in December 2012 as a qualified charitable distribution (QCD), as long as that amount is transferred in cash to the charitable organization before February 1, 2013, and the distribution otherwise qualifies.
In other words, a taxpayer has until January 31, 2013, to retroactively benefit from a QCD for the 2012 tax year. This option is available whether or not the taxpayer itemizes deductions.
The IRS says in the new notice that QCDs should be reported on Line 15 of Form 1040, with the full amount of the distribution shown on Line 15a. Don't enter any of these amounts on Line 15b, but instead, write "QCD" next to that line.


Related articles:

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.