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IRA Charitable Rollover Exclusion Now Permanent

Posted on: January 5th, 2016
President Obama signed off on legislation that permanently preserves the IRA Charitable Rollover. The provision allows eligible individuals to transfer up to $100,000 directly from a traditional IRA to a charity with no income tax implications. 

Charitable giving offers a number of tax benefits. Tax deductions from charitable giving can help minimize income and estate tax requirements while at the same time benefiting a good-willed organization. Donations can exhibit an individual’s values and generosity and preserve their legacy. 

Congress originally passed the legislation granting authority for the IRA Charitable Rollover deduction in 2006, at which time individuals had a limited time to take advantage of the tax benefits. The latest legislation signed in mid-December not only makes the provision permanent, but is also retroactive to January 1, 2015. Eligible IRA owners only had a few short days after the law passed to make last-minute charitable planning adjustments for the 2015 tax year. Eligible persons are those over the age of 70 ½ and contributions must be made to qualified charities as recognized by the Internal Revenue Service (IRS). (Generally, churches and religious organizations, tax exempt medical organizations and hospitals, and tax exempt educational organizations qualify. Individuals should do their due diligence and verify if the organization qualifies by referencing the IRS charitable organization search here. Private foundations and donor-advised funds are not eligible.)

Cash donations are not the only way an individual can take advantage of the tax benefits that charitable giving affords. Our tax attorneys review tax rules for non-cash charitable deductions here.

The latest tax provision for charitable giving comes at a time when the IRS has proposed new rules to substantiate deductions. The new rules would require charities to collect and store donors’ Social Security or Tax Identification Numbers for donations in excess of $250. As of this writing, lawmakers oppose this possible requirement for several reasons,  including the risk that charities will take on by having to store sensitive personal information, and how these rules would change charity-donor relationships. 

Now that the IRA Charitable Rollover deduction is permanent, traditional IRA owners can meet with their tax attorney to create or amend their charitable planning strategy. Since the provision is retroactive to January 1, 2015, there is still a short window of opportunity to take advantage of the deduction for the 2015 tax year.

By Attorney Samantha Reichle
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