Late Tuesday, the Senate finally voted to extend a package of temporary tax breaks through the rest of the year. Already passed by the House, the so-called tax extenders bill now goes to the White House, where approval is considered likely.
Many clients had been holding off on making a year-end IRA charitable transfer, which lets taxpayers age 70-1/2 and older donate up to $100,000 in IRA assets directly to eligible charities without reporting the withdrawal as taxable income. The donation also can be counted toward these taxpayer’s annual required minimum distribution.
Under the tax-extender’s bill, this charitable deduction is continued through 2015. Since a deduction lowers a donor’s modified adjusted gross income, the donation can help to reduce or avoid various taxes and penalties. It can also help a taxpayer avoid higher Medicare premiums, some of which are tied to income.
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