Making Charitable IRA Donations in 2012

Making charitable donations from your IRA is different in 2012. Congress has made life difficult for tax attorneys, accountants, financial advisors and their clients as they continue to give and take away deductions.

In 2011, under the Qualified Charitable Distribution provisions of the tax code, you could make an IRA distribution to a qualified charity and not include the distribution as income. IRA owners age 70½ or older could contribute up to $100,000 of IRA funds to a qualified charity and not recognize income on the distribution. The donation was not tax deductible, but the distribution was not included as taxable income.

Congress let this provision expire on December 31, 2011.

Beginning January 1, 2012, any IRA owner 59½ or older can make an IRA distribution to a qualified charity. But, like other IRA distributions, you will have to report the distribution as income and then claim a corresponding charitable deduction. This will increase your adjusted gross income on your tax return.

The Wall Street Journal had a good summary of the current status here.