Extension of 2014 Qualified Charitable Distributions

On December 3, 2014, the House of Representatives passed legislation that would extend a number of tax breaks for the 2014 tax year.  Senate approval of the bill is likely.  Please click here to view a summary of the Bill (H.R. 5771).

Among the tax break extensions is the tax break for charitable contributions made directly from an IRA, also known as Qualified Charitable Distributions (“QCDs”).  This option provides individuals with a nice alternative to donating to a charity.

The tax break allows an IRA owner to transfer $100,000 annually to a charitable organization without incurring any income tax.  The IRA owner must be age 70 ½ or older and the funds must be distributed directly to the charity.  The QCD also may be used to satisfy the required minimum distribution for the year.

QCDs may not be made to donor advised funds or to supporting organizations and may not be made from employer-sponsored retirement plans.  Although QCDs may be distributed to a charity tax free, they generally do not provide the donor with a charitable deduction.

The planning window for this opportunity is currently limited since the extension only applies for the 2014 tax year and the Senate has not yet approved the Bill.

 

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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