Since 2006, taxpayers at least 70 ½ years of age have been able to make charitable contributions of as much as $100,000, directly from their retirement accounts, without having it affect their adjusted gross income. There were a number of good tax-saving reasons that people took advantage of this law, but here is the kicker — it was supposed to expire at the end of 2011. Which means there was no reason for anyone to make such a contribution in 2012 – until it was reinstated as part of the American Tax Payer Relief Act in January 2013.
Well, that wouldn’t seem to help anybody, but this new legislation gives us a fleeting chance, here’s why:
- You can still make this type of contribution for 2012 as long as you do so before February 1, 2013.
- Also, if you waited until December to take distributions from your IRA, you can donate that money to charity before January 31, 2013 and receive the same treatment.
- A word to the wise for 2013; you must do it the usual way – by asking the IRA custodian to send the distribution directly to the charity.