Congress once again waited until the final hours to provide tax clarity by passing the Protecting Americans from Tax Hikes Act of 2015 (PATH). The Act does considerably more than the typical tax extenders legislation seen in prior years. It makes permanent over 20 key tax provisions. Here are some of the more popular provisions.
Charitable Distributions from IRAs
The Act permanently extends the provision for individuals age 70 1/2and older to be allowed to make tax-free distributions from individual retirement accounts (IRAs) to a qualified charitable organization. The treatment continues to be capped at a maximum of $100,000 per taxpayer each year. Therefore, amounts in excess of $100,000 must be included in income, but may be taken as an itemized charitable deduction, subject to the usual adjusted gross income (AGI) annual caps for contributions.
Points to note about the IRA charitable rollover:
- Married individuals filing a joint return may jointly exclude up$200,000.
- You can use an inherited IRA to donate but you have to be at least 70 ½
- The charity receiving donated IRA funds may not be a donor advised fund, supporting organization, or most private foundations.
IRA assets are particularly favorable when donating to charity, rather than leaving to heirs, because