Now that your taxes are done . . .
Some good news from the fiscal cliff deal
If you’ve just completed your taxes and paid more to Uncle Sam than you intended, read on. The Fiscal Cliff Deal, officially known as the American Taxpayer Relief Act of 2012, includes a provision you may find helpful as you think about 2013 income taxes.
The provision is for individuals 70½ and older who are required to take distributions from their Individual Retirement Accounts (IRA). If this doesn’t describe you, you might want to give this to an older friend or family member.
At age 70½ you are required to take distributions from your IRA, even if it puts you in a higher income tax bracket. But the IRA Charitable Rollover provision in the Taxpayer Relief Act may help you avoid that higher bracket. You may make a donation of up to $100,000 from your IRA directly to a qualified charity such as Asian Access. You may not make this donation to a donor advised fund, a supporting organization, or a private foundation. Also, this provision does not apply to Roth IRAs.
Although the funds are given to a charity, this donation counts as a distribution from your IRA. But it will not increase your income, potentially putting you into a higher income tax bracket. While you cannot take an income tax deduction for this donation, you may still avoid unnecessary taxes by staying out of a higher tax bracket.
The IRA Charitable Rollover provision is not for everyone. Check with your tax advisor to determine the best course of action for your specific situation.
Should you decide to move ahead with a donation from your IRA, ask your IRA custodian to send a distribution to Asian Access, PO Box 3307, Cerritos, CA 90703. This provision is temporary—it applies only to this year. So your IRA custodian must complete the distribution by December 31, 2013.