Under current law, if you are age 70½ or older, you are permitted to donate up to $100,000 from your IRAs to public charities without having to count the distributions as taxable income. This important charitable giving incentive, however, expires at the end of the year.
Since it’s enactment in August 2006, the IRA Charitable Rollover has proven to be a simple, efficient, and effective means for you to give back to your fellow citizens and to the causes in which you believe.
The IRA Charitable Rollover is particularly helpful if you do not itemize your tax deductions and would not otherwise receive any tax benefit for your charitable contributions. By not having to include your IRA withdrawal in your income, you are effectively receiving a charitable deduction before calculating your Adjusted Gross Income for tax purposes.
By eliminating the barrier in the tax law that had discouraged transfers from IRAs, the IRA Charitable Rollover has generated a significant amount of new charitable giving to cash-strapped charities throughout the country. It has also enabled these charities to maintain or expand critical services. This is especially important since most charities have seen their contribution income drop with the economy.
The tax break has resulted in gifts from IRA Charitable Rollovers ranging from as little as $10 all the way to the legal maximum of $100,000. These gifts have helped organizations build cancer centers, develop programs for counseling at-risk youth, support housing for homeless families, conserve wilderness areas and provide art therapy for people with developmental disabilities.
It will take Washington Congressional action to extend the IRA Charitable Rollover into 2010 and beyond. As this column is written, the House has passed a bill to extend the IRA Charitable Rollover for one year. However, the bill has not even been scheduled for a vote in the Senate.
Congress must act now before the IRA Charitable Rollover expires on December 31, 2009. In order to preserve this important charitable tool, many taxpayers are calling both of their Senators and urging them to extend the IRA Charitable Rollover before the end of the year. If everyone did this, it could result in a continued tax break for your charitable contributions from your IRAs.
By: Matthew M. Wallace, CPA JD
Published edited December 13, 2009 in The Times Herald newspaper, Port Huron, Michigan as: IRA charitable rollover is set to expire Dec. 31