UKRAINIAN ORTHODOX CHURCH OF THE USA
CONSISTORY OFFICE OF THE TREASURER
It’s Not Too Late to Make Your 2012 Charitable Contribution!
Provision in “Fiscal Cliff” Law Provides Very Limited Window of Time for Donors to Make Direct Charitable IRA Distributions in January of 2013 and Count Them as Made in December of 2012
The so-called “fiscal cliff” law just passed by Congress and signed by President Obama, formally known as the “American Taxpayer Relief Act” (the Act), includes a little-publicized provision providing a very short window of opportunity for eligible taxpayers to make direct charitable distributions from their IRAs in January of 2013 and count them as made on December 31, 2012.
The Act also contains a relief provision for eligible taxpayers who took distributions from their IRAs in December of 2012 (not knowing that the direct charitable IRA distribution exclusion would be retroactively renewed). The Act allows those taxpayers to exclude those distributions from their taxable income (within the prescribed limits) so long as they transfer the distributed funds to a qualified charity by the end of January 2013.
These rules relate to the fact that the Act re-extends through 2013 the exclusion for direct charitable IRA distributions by taxpayers 70½ years old and older. That exclusion had expired as of December 31, 2011. The renewal is retroactive and covers 2012. Given the fact that the renewal of the provision did not occur until January of 2013, Congress is allowing taxpayers a temporary window through January 31, 2013, during which taxpayers may make direct charitable IRA distributions (within the prescribed limits) and treat them as having been made on December 31, 2012.
The Act also provides leniency for distributions made from an IRA to a taxpayer in December of 2012, if the funds are subsequently transferred by the taxpayer to an eligible charitable organization by January 31, 2013 (and the transfer otherwise meets the criteria for exclusion).
Some taxpayers who meet the criteria for making direct charitable distributions from their IRAs may realize a substantial tax benefit by taking advantage of this unique and very limited opportunity. For taxpayers who qualify, up to $100,000 per taxpayer may be excluded from income under this provision of the law for each year that it applies.
What does this all mean?
If you are 70 1/2, and you have not yet made your charitable contribution to the various ministries of the Ukrainian Orthodox Church of USA or the Ukrainian Historical and Educational Center of NJ, you can still do so up until January 31, 2013 and have it count as a contribution for 2012, but taking a distribution from your IRA. Your distribution will not be taxable.
The transfer must be made directly by the IRA’s trustee to the UOC of USA. You may not take a distribution personally and then contribute it to the UOC of USA without triggering taxation of the distribution.
If you believe that such a gift may be appropriate for you, we encourage you to promptly consult with your tax advisor and IRA custodian, as this limited window of opportunity in the tax law expires on January 31, 2013.
Please let us know if we can help you facilitate such a gift in any way by contacting Natalia at (732) 356-0090 or firstname.lastname@example.org.