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...

Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...
By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.