With tax season quickly approaching the Center would like to remind you of a deduction opportunity still available for our charitably inclined clients.
If you would like to use a required distribution from your IRA funds to make gifts to your favorite charities, you may still do so for the 2010 tax year due to the omnibus tax legislation signed by President Obama in December. You'll have act quickly, however.
The new tax rules extend for 2010 and 2011 the option of donating IRA funds directly to qualified charities. By taking this path, the IRA holder or beneficiary avoids taking possession of the funds and the tax bill that would result.
Because the legislation took effect so close to the end of the year, a "special rule" validates such distributions for the 2010 tax year as long as the transaction is completed by January 31, 2011.
Briefly, a qualified charitable distribution (QCD), which can be made only by IRA participants who are at least 70½, may be as high as $100,000. You may have your required minimum distribution (RMD) designated as a QCD. The funds, which cannot come from active SEP or SIMPLE IRAs, must be sent directly to the qualified (IRS-approved) charitable organization. You'll be able to report the donation on your 2010 tax return.
If you wish to take advantage of this time-limited provision in the tax law, please let your financial planner at your earliest convenience.
If you're intrigued by the idea but would like to discuss the rules in more detail, your planner will be happy to talk with you about it - but please call soon!
Warm regards,
Center for Financial Planning, Inc