As the end of school approaches, many parents and grandparents consider college expenses for their children. What once was an easy and low-tax way to give money to younger children will soon cost a good deal more. Ashley Ebeling for Forbes explores the changes in the so called “Kiddie Tax” in her article, The Kiddie Tax Grows Up: Beware The IRA Trap
Tag: Roth IRA
Extension of ability to do tax-free Individual Retirement Account rollovers to charity
The American Taxpayer Relief Act of 2012 (ATRA) extended the qualified charitable distribution (QCD) provisions for 2012 and 2013. Several special transition rules were included in ATRA to enable taxpayers to have a donation made before February 1, 2013, treated as a 2012 QCD.
A QCD is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity. An IRA owner can exclude from gross income up to $100,000 of a QCD made for a year, and a QCD can be used to satisfy any IRA required minimum distributions (RMDs) for the year. Also, the amount of a QCD excluded from gross income is not taken into account in determining any deduction for charitable contributions.