Charitable IRA Donations Coming Back in Time for 2012?

When it comes to taxes, these are very uncertain times. Have you heard of the impending “fiscal cliff?” While things are uncertain for 2013, you may be thinking Congress and the White House may retroactively extend some “expired” taxpayer favorites. For example, one move lost in 2011 is the ability to give the “required minimum distribution” (RMD) from your IRA to charity. But do not count on retroactive resuscitation for this favorite in time for your 2012 taxes. Until the end of 2011, as you likely recall, it was possible for individuals over the age of 70 ½ to simply rollover their RMDs from their IRAs straight into the waiting hands of their favorite charity. As a result, this saved these taxpayers from any pesky taxable income. The Wall Street Journal took up this matter in a recent article titled “Should You Wait on IRA Donations?” According to the article, aside from benefiting charity, the benefit to seniors making this savvy move include: “By reducing your adjusted gross income, the tax provision may help you keep it below the thresholds at which you could lose some of your deductions and other tax benefits, or become subject to higher Medicare premiums and taxes on your Social Security benefits.” The verdict: it might not be worth risking the wait on Congress and the White House to find out the official ruling on charitable IRA distributions for 2012. The article notes, however, that even if you have to take the RMD and accept the taxable income, you can still give it away and claim a charitable deduction. Although that’s not as beneficial as the Charitable IRA rollover, it’s better than nothing and certainly far better than inaction. Why? There’s an excise tax on the failure to timely accept the full amount of your RMD. Reference: The Wall Street Journal (September 22, 2012) “Should You Wait on IRA Donations?”