Charitable Donations direct from IRA's

[John of PA]

As you may know, the tax act passed 1-1-13 retroactively allows for 2012 the donations direct from an IRA to a charity up to 100,000. For someone who has taken thier RMD for 2012 in 2012, how can they go about getting this donation deduction. Do they just give the charity the money by 1-31-13 and deduct it on thier 2012 taxes, or do they have to make a transfer somehow in or out of thier IRA in Jan '13.? Thanks,

[Gene V]

American Taxpayer Relief Act of 2012

John, see page 23 on the update 1-8-2013 in the update section of TheTaxBook.

New Law: Once again, Congress retroactively extended this provision late in the year.
A direct transfer from an IRA to a qualified charity is tax free for tax years 2012 and 2013
(with it expiring after 2013). Since the new law wasn’t enacted until January 2, 2013, a special
rule allows direct transfers made in January 2013 to be treated as if they were made
on December 31, 2012. Thus, a qualified charitable distribution made in January 2013 is
permitted to be (1) treated as made in the taxpayer’s 2012 taxable year and thus count
against the 2012 $100,000 limitation on the exclusion, and (2) treated as made in the 2012
calendar year and thus permitted to be used to satisfy the taxpayer’s minimum distribution
requirement for 2012.

The new law contains another special rule that allows a taxpayer who already took an IRA
distribution in December 2012 to contribute that amount to a charity before February 1,
2013, and count it as an eligible charitable distribution to the extent it otherwise meets the
requirements for an eligible charitable distribution. Thus, even though the transaction
is not a direct transfer from the IRA to a qualified charity, it is still treated as if it were a
direct transfer from the IRA to the charity.

[Roland Slugg]

There is another thread here, started a few days ago, on this same point. You may wish to locate it and read the responses, although the one above should be sufficient.

IMO Congress was needlessly unfair in limiting QCDs to those made only in December 2012 or January 2013. Many people, I'm sure, took their 2012 RMDs before December, and they are now denied the benefit of a QCD due to Congress's failure to act in a timely way. Seems to me the QCD extension should have been made retroactive to the entire 2012 year, as were all other extenders, or at the very least to, say, the last quarter of 2012.

[John of PA]

Thank you Gene and Roland, great info.

[taxitc]

How do you report it? Line 15a (QCD) amount $ then 15b as 0$? Does Charity (Church) need to provide any info? How will IRS know anything to support? Should note in return be provided?

[Bees Knees]

How do you report it? Line 15a (QCD) amount $ then 15b as 0$? Does Charity (Church) need to provide any info? How will IRS know anything to support? Should note in return be provided?

TTB, page 3-3:

IRA distributions. Enter any distribution from a traditional
IRA, Roth IRA, SEP IRA, and a SIMPLE IRA on line 15. If total
distribution is taxable, leave line 15a blank and enter the total
distribution on line 15b. If all or a portion of the distribution is
not taxable, enter the total distribution on line 15a and the taxable
portion on line 15b. The following are examples where
the total distribution may not be fully taxable....

• The distribution is a qualified charitable distribution. Enter
“QCD” next to line 15b. Do not claim a charitable contribution
deduction for any QCD that is excluded from line 15b
income.