Tax-Free Transfers to Charity Renewed For IRA Owners 70½ or Older; Rollovers This Month Can Still Count For 2012 PDF Print E-mail

WASHINGTON — Certain owners of individual retirement arrangements (IRAs)
have a limited time to make tax-free transfers to eligible charities and have
them count for tax-year 2012, the Internal Revenue Service said today.

IRA owners age 70½ or older have until Thursday, Jan. 31 to make a direct
transfer, or alternatively, if they received IRA distributions during December
2012, to contribute, in cash, part or all of the amounts received to an
eligible charity.

The American Taxpayer Relief Act of 2012, enacted Jan. 2, extended for 2012
and 2013 the provision authorizing qualified charitable distributions
(QCDs)—otherwise taxable distributions from an IRA owned by someone, 70½ or
older, paid directly to an eligible charitable organization. Each year, the IRA
owner can exclude from gross income up to $100,000 of these QCDs. First available
in 2006, this provision had expired at the end of 2011.

The QCD option is available regardless of whether an eligible IRA owner
itemizes deductions on Schedule A. Transferred amounts are not taxable and no
deduction is available for the transfer. QCDs are counted in determining
whether the IRA owner has met his or her IRA required minimum distributions for
the year.

For tax-year 2012 only, IRA owners can choose to report QCDs made in January
2013 as if they occurred in 2012. In addition, IRA owners who received IRA
distributions during December 2012 can contribute, in cash, part or all of the
amounts distributed to eligible charities during January 2013 and have them
count as 2012 QCDs.

QCDs are reported on Form 1040 Line 15. The full amount of the QCD is shown on Line
15a. Do not enter any of these amounts on Line 15b but write “QCD” next to that
line. Details are on IRS.gov.
 
IRS-Nine Tax Tips for Charitable Taxpayers PDF Print E-mail

If you make a donation to a charity this year, you may be able to take a deduction for it on your 2011 tax return. Here are the top nine things the IRS wants every taxpayer to know before deducting charitable donations.

  1. Make sure the organization qualifies Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
  2. You must itemize Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
  3. What you can deduct You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
  4. When you receive something in return If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
  5. Recordkeeping Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
  6. Pledges and payments Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
  7. Donations made near the end of the year Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
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