Popular IRS Charitable Tax Break Can Be Valuable

for Those Who Know How to Use It

Qualified_charities

BY TOM HERMAN

A popular tax break that died at the end of 2014 has returned from the dead.

That’s welcome news for many older people thinking about making gifts to their favorite charities directly from their individual retirement accounts. It’s joyous news for many charities, too.

But, as with too many of our nation’s tax laws, this seemingly simple break can be tricky, as readers have pointed out with several excellent questions.

At issue is a law that generally allows IRA owners who are 70½ or older to transfer as much as $100,000 a year to qualified charities directly from their IRAs, tax-free. That transfer is excluded from your income. If done properly, the transfer counts toward an IRA owner’s required minimum distribution for the year.

Although this provision expired at the end of 2014, Congress resurrected it late last year, making it retroactive to the start of 2015—and making it permanent, says Greg Rosica, a tax partner at Ernst & Young LLP.

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