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President Signs 2014-Only Tax Incentives

By Mark V. Ewert - Dec 29, 2014 at 7:45AM

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Take advantage of limited-time charitable tax benefits with IRA donations.

Earlier in December, the United States House of Representatives voted down H.R. 5806, The Supporting America's Charities Act. That was disappointing to many in the nonprofit and philanthropy sectors, who fought hard for its passage. However, on Dec. 19, President Obama signed into law H.R. 5771, The Tax Increase Protection Act of 2014. Both of these laws would extend 55 tax provisions that expired at the end of 2013.

The former Act, H.R. 5806, would have made the provisions permanent. Although that effort failed, H.R. 5771, makes these same provisions retroactive for all of 2014 and extends them through the end of this calendar year only. So you still have until Dec. 31 to take advantage of them. Check the bill at the preceding link for deductions such as state and local taxes, higher education expenses, and mortgage insurance premiums.

One important provision that was extended with H.R. 5771 is for direct charitable gifts through IRA rollovers. This provision allows people age 70.5 and older to make direct transfers from traditional and Roth IRAs, free from federal taxation and income taxes under the laws of states that follow federal guidelines for determination of adjusted gross income, in amounts up to $100,000 to qualified nonprofits.

Here are the requirements to gain these deductions:

  • The provision applies only to IRAs, not to 401(k)s, 403(b)s, and other similar retirement plans.
  • Gifts must be made directly to a qualified nonprofit and may not be made to donor-advised funds, private foundations, or supporting organizations. You can check for qualified nonprofits at the IRS website.
  • Those who made direct transfers to nonprofits earlier in 2014 are covered by the retroactive nature of the provision.
  • These distributions will count toward required IRA withdrawals for 2014.

This is a very limited time frame, so if you have check-writing privileges on your IRA account, you may want to use them to make your qualified donations. If not, contact your IRA hosting organization to arrange the gifts as soon as possible.

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