Donating to Charity from IRA’s

The Pension Protection Act of 2006 added a provision that allowed IRA owners over the age of 70 1/2 to contribute up to $100,000 ($100,000 per spouse for Married Filing Jointly taxpayers) directly to a charity (such as The Vegetarian Resource Group). This direct transfer from the IRA to the charity would count toward the IRA owner’s required minimum distribution (RMD) and would be excluded from income on their tax return. The Tax Relief Act extended this provision through 2011 and further provided that qualified donations made after December 31, 2010 and before February 1, 2011 would be deemed to have been made by December 31, 2010.

It should be noted that because the distribution is excluded from income, the taxpayer cannot take a charitable deduction on Schedule A for the amount. Further, in order to qualify, it is required that the distribution be made directly to the organization from the IRA. Distributions made to the taxpayer and then paid by the taxpayer to the charity will not qualify.

(This information is from Clifton Gunderson and should not be construed as legal, accounting, or tax advice. Speak to your own tax professional.)

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