Sunday, December 4, 2016

IRA Charitable Rollover

 [Photo credit: Lending Memo]
Last year, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law. Included in this package of changes to tax code is a permanent inclusion of IRS Charitable Rollover. This permanent change removes the uncertainty that has cropped up several times in recent years; after originally expiring in 2008, the incentive was temporarily renewed 5 times.

The IRA Charitable Rollover allows individuals who are 70 1/2 years old to donate up to $100,000 to charitable organizations directly from their IRA, without that donation being counted as taxable income when it is withdrawn. To qualify, contributions must come from a traditional IRA or Roth IRA, and they must be made directly to a public charity. Additionally, the donor may not receive goods or services in exchange for the donation, and they must retain a receipt from each charity to which a donation is made.

Giving incentives such as the IRA Charitable Rollover have a tremendous impact on the social sector. According to Independent Sector, the provision led to more than $140 million in gifts during its first two years.  Because it is available to taxpayers whether or not they itemize their tax returns, the rollover helps older Americans, who are more likely not to file itemized returns. Extending this charitable provision permanently provides needed clarity in the tax code and allows for Americans to make giving decisions without wondering whether the provision will continue to exist.

No comments: