The American Taxpayer Relief Act of 2012 which Congress passed on Tuesday, January 1, contains a unique opportunity to promote giving and 2012 tax planning through an extension of the IRA Charitable Rollover.
The IRA Charitable Rollover was extended for December 2012 and all of 2013. This extension allows people age 70½ and older to take tax-free distributions from individual retirement plans for charitable purposes. Up to $100,000 may be given directly from an IRA to charity as a qualified charitable distribution.
- Individuals who took distributions from their IRA accounts in December of 2012 can transfer up to $100,000 of that amount to a qualified charity (those meeting the 501(c)3 provisions) and elect to treat it as a direct distribution to charity in 2012. To take advantage of this provision, taxpayers must write a check for the amount to a qualifying charity between January 1, 2013 and January 31, 2013. This option is not available for IRA distributions taken before December of 2012.
- Distributions made in January of 2013 that are transferred direct from the IRA custodian to the charity will be considered a 2012 distribution.
- Donors making IRA distributions to charity in 2013 must request that the IRA custodian transfer the distribution amount direct to the charity. If the transaction is to apply to the 2013 tax year, donors should request the transaction after January 31, 2013. This provision expires December 31, 2013.
Have questions about the IRA Charitable Rollover? Post a comment below or contact Tax Planning & Preparation Group at (440) 449-6800.