With the passage of the American Taxpayer Relief Act of 2012, the provision for Qualified Charitable Contributions (QCD) from an IRA has been extended to the end of calendar year 2013.
Great news, right? But what does that mean? Can you make a QCD for 2012?
As you know, the QCD provision is limited to taxpayers who are over age 70½ and thus subject to Required Minimum Distributions (RMD). In addition, the QCD must normally be sent directly from your IRA custodian to the qualified charity – it can’t be taken in cash and then sent to the charity. If you qualify and you do the distribution correctly, you will not have to include the distribution on your tax return as income. You also would not count the charitable contribution as an itemized deduction.
If you happened to send a distribution directly to a charity from your IRA during 2012, it will be treated as a QCD. This probably didn’t happen in very many circumstances since the QCD provision was not available until passage of the law on January 1, 2013.
Special Provision for 2012
For 2012 distributions there is a special provision: if you made a distribution in cash during December 2012, you have until the end of January 2013 to send a contribution in any amount up to $100,000, limited by the amount of your distribution during December 2012. You can then treat this contribution as if you had sent it directly to the charity – don’t count it as income, and don’t itemize the contribution. This distribution could have been your required distribution for the tax year 2012.
If you were waiting on the fiscal cliffhanger, you can still make a Qualified Charitable Distribution during January 2013 – directly from your IRA to the charity – and count it as if the QCD occurred in December 2012.
For 2013, the QCD is available through the end of the year under normal rules. This means that you can, if you’re age 70½ or older, make direct distributions from your IRA to a qualified charity or charities, not counting the distribution as income and not itemizing the charitable contribution.