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Give IRA funds straight to qualified charity

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in Small Business Tax,Small Business Tax Deduction Strategies

The new tax law enacted around the turn of the year—the American Taxpayer Relief Act of 2012 (ATRA)—extends a unique tax break for charitably inclined retirees. But the window closes again at the end of this year.

Strategy: Donate funds in your IRA to a qualified charity. Instead of taking a taxable IRA distribution and contributing the difference, tap directly into the IRA. There’s no “middle step” involved.

Although you can’t deduct the donation, you won’t pay any tax on the distribution either.

Here’s the whole story: The tax break for IRA distributions to charity officially expired after 2011, but was extended through 2013 by ATRA, retroactive to the 2012 tax year. So you still have until Dec. 31, 2013, to take action.

Under this tax law provision, an individual over age 70½ can exclude from tax “qualified charitable distributions” from an IRA of up to $100,000. The distribution isn’t reported as taxable income or treate...(register to read more)

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