Last Shot at IRA Gifts to Charity for '12
by Terri Eyden on
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?
• Wealth Management
• 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.
You may like these other stories...
Lois Lerner isn’t a Superwoman, but she’s showing at least as much resilience as Lois Lane.A new report released on March 11 by the House Committee on Oversight and Government Reform, one of several government...
Each tax-filing season poses different challenges for small business owners – from understanding the new tax laws and regulations to preparing new forms and disclosures.But according to Kevin Anderson and Doug Bekker,...
In Denver, state legislators are probably thinking, "Why didn't we think of this earlier?" The state of Colorado's retail marijuana sales (separate from medical marijuana sales) in January alone generated...
Upcoming CPE Webinars
BAR is an acronym for: Boundaries, Authority and Role. This simple tool will provide participants with a solid understanding of leadership essentials to improve their performance.
This material is designed to provide a start-to-finish overview of how to plan and complete high-quality small audits efficiently.
In this session Excel expert David H. Ringstrom, CPA shares numerous techniques that you can use to work with charts more efficiently.
Key Accounting and Reporting Issues for Nonprofits No. 1: Overview and Statement of Financial Position
This material focuses on non-profit organizations organization, accounting and reporting.