YOU MUST ACT BEFORE FEBRUARY 1, 2013 – CHARITABLE DONATIONS FROM YOUR IRA
The American Taxpayer Relief Act of 2012 extended a “taxpayer friendly” provision for 2012 and 2013 which provides for a “qualified charitable distribution” from a taxpayer’s Individual Retirement Account (IRA). This provision, which had “sunset” at the end of 2011, was widely expected not to be renewed.
A “qualified charitable distribution” (QCD) is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70 ½ or over that is paid directly from the IRA to a qualified charity. An IRA owner can exclude from gross income up to $100,000 of a qualified charitable distribution made for a year, and the “QCD” can be used to satisfy any required minimum distributions from the IRA for the year. The amount of a QCD excluded from gross income is not taken into account in computing your charitable contributions for the year. In other words, there is not a benefit.
The IRA owner can treat a contribution made to a qualified charity in the month of January 2013 as a 2012 qualified charitable distribution in either of the following circumstances: