Jan 12, 2011

Charitable IRA distributions for 2010

Seniors 70-1/2 and older must take annual required minimum distributions from their IRA, at which point the distribution is taxed. However, if you do not need the income, you can dodge the taxman - and do a good deed  to boot - by donating the distribution directly to a charitable organization.

Because of congressional foot dragging in 2010 and the last-minute passage of the tax bill, seniors will be allowed to treat any charitable IRA donations they make through the end of January 2011 as if they made it in 2010. Moreover, your charitable donations are not limited to the required minimum distribution; the new law permits you to give up to $100,000 to charity in 2010, and another $100,000 in 2011. The donation must be made directly to the charity; i.e., the custodian of the IRA must be directed to make the transfer. Another caveat: You will not be able to claim a deduction on your tax return for the donation.

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