Tax Saving Strategies for 2012: Considerations to Weigh when Planning to Use Your IRA Withdrawal as a Charitable Contribution

If you are age 70 ½ or older in 2012, you are required to withdraw a minimum amount from your retirement accounts.  In 2011 and prior years, the law permitted you to make a contribution from your IRA directly to one or more charities up to a total of $100,000.  You did not take a charitable contribution deduction on your income tax return, but the amount was also not included in your taxable income.  This is significant since your taxable income determines the amount you pay for Medicare coverage and whether some portion of your Social Security is taxable.  In addition, the amount transferred directly to charity could also qualify as part of your required minimum distribution. 
Steger Gowie expects that it is highly likely that Congress will reinstate this provision for 2012.  Therefore, if you would like to use funds from your retirement account to make charitable contributions and have the funds qualify as part of your required minimum distribution, you should consider delaying your withdrawals until it is clear what action Congress will take.
If you are considering using your IRA withdrawal as a charitable contribution, give Steger Gowie a call today and schedule an appointment with one of our Tax Specialists at (610) 335-1020.