Thursday, January 3, 2013
As I have previously discussed, Congress averted going over the fiscal cliff with a last minute resolution. The fiscal cliff bill also reactivates an old special tax break for senior citizens over the age of 70.5 who choose donate up to $100,000 to a charity from their IRAs. The way that this tax break usually works is that the owner of an IRA appoints a custodian to take a sum of money from their IRA to donate to a charity.
However, if a person would like to take advantage of this opportunity for 2012, he or she must do so quickly because the Congress only extended the deadline to January 2013. This tax break is even more limited by the fact that this only applies owners of IRAs who have postponed taking their IRA distribution until December. If that IRA owner makes the donation before the end of January 2013, then the amount that they donated will count towards their 2012 minimum required distribution. To make the donation, IRA owners should still follow the procedure of appointing a custodian to make the donation. While a donor cannot take a deduction for this contribution, he or she does not have to include the amount that was donated to the charity in their adjusted gross income.
See Deborah L. Jacobs, Fiscal Cliff Deal Allows Giving IRA Assets To Charity, Forbes, Jan. 1, 2013.