Congress Gives Partial Extension to IRA-to-Charity Rollover
On December 16, the U.S. Senate voted to extend several charity tax breaks through only the end of 2014, though many in the nonprofit sector want a permanent implementation of the policies.
Many fundraising professionals support the IRA rollover tax break in particular, which they want implemented permanently. Before the vote, the tax breaks only applied to 2013 tax filings, but are now slated to apply to donations made by the end of the 2014 calendar year.
Enacted in 2006, the IRA tax-to-charity rollover allows 70-1/2 or older U.S. citizens to donate up to $100,000 from their Individual Retirement Accounts (IRAs) to public charity without being taxed. According to some sources, older philanthropists were waiting to see the result of the vote before making giving decisions in the final weeks of 2014.
The IRA-to-charity rollover encourages charitable giving among older prospective donors – especially those who do not itemize their donations. The tax break allows individuals to give large sums from their IRAs to charity without that allotment applying to their adjusted gross income. Additionally, the donations are applicable to required minimum deduction. This means that on joint-tax returns, a spouse can used a Qualified Charitable Distribution (QCD) to exclude up $100,000 per his/her partner’s charitable giving through the IRA rollover.
In the past, Congress has voted on the retroactive applicability of the IRA rollover tax. If Congress picks up the debate again and passes similar legislation, the tax break could theoretically apply to the 2015 calendar year.
Other tax breaks given partial extension through the end of 2014 include conservation donation incentives that help modest-income landowners contribute to land conservation efforts and food inventory gift incentives that encourage farmers to donate excess food stock to food banks.