Are you at least 70½ years old and required to take out required minimum distributions (RMD) from your IRA? Are you also contemplating charitable donations before year-end? Through the end of 2013, you can make charitable donations up to $100,000 directly from your IRA and have it count toward your RMD.
Though this provision has existed in past years, it did not have much of an impact. For 2013, however, it very well may save you some tax. For 2013 and future years, the itemized deduction and exemption phaseouts are back. These, and the new “Obamacare” surtaxes, are based on your adjusted gross income.
Making charitable donations out of the IRA keeps your RMD out of your adjusted gross income, thus lowering the adverse effects of these phaseouts and surtaxes. You don’t get a charitable deduction, but the RMD is not included in income. Note that such a contribution must be completed by the end of this year. This may be the last chance to take advantage of this provision, as Congress has not extended this provision beyond 2013.
For further information or to discuss your specific situation, please contact your Aronson tax advisor at 301.231.6200.
About the Author: Laurence C. Rubin, CPA is a partner in Aronson’s Tax Services Group, where he specializes in tax controversy and business dispute matters. As a trusted and objective advisor to his clients, he helps them understand the tax implications of their day-to-day choices and then works with them to create immediate and long-term tax planning strategies to minimize risk and liability.