The new Taxpayer Relief Act is sending good news to nonprofits and donors throughout the country. With the passing of the American Taxpayer Relief Act of 2012 (H.R. 8) on January 1, 2013, the charitable deduction will continue to be tied to an individual’s or household’s corresponding tax rate. There is no cap on charitable deductions. For example, under the new tax law the highest tax bracket will be 39.6 percent. Therefore, affected earners can deduct 39.6 cents for every dollar donated.
Another positive attribute of the new law is the extension of the IRA charitable rollover through December 31, 2013, permitting tax-free distributions to a charity from an Individual Retirement Account (IRA) held by someone age 70 ½ or older of up to $100,000 per taxpayer, per taxable year, retroactive to January 1, 2012. The retroactive extension also allows donors to make distributions directly to eligible charities before February 1, 2013 and elect to have such distributions treated as qualified charitable distributions in 2012. Individuals who have already received an IRA distribution in 2012 can count that distribution as a 2012 IRA charitable rollover if they transfer the amount in cash before February 1, 2013 to an eligible charity.
This is good news for Alaskans who make charitable contributions. This is even better news for individuals and families who receive services from nonprofit organizations that rely on these donations.
Donor advised funds and private foundations do not qualify for the IRA charitable rollover; however, The Alaska Community Foundation (ACF), the Alaska Fund, field of interest funds, and Affiliate community funds do. For more information on any of these funds, visit ACF online at www.alaskacf.org or contact ACF staff at 907-334-6700.
For 18 years, The Alaska Community Foundation has acted as a statewide platform for philanthropy, helping individuals to connect with causes they care about across Alaska. Through the building of endowments, ACF helps organizations and communities create funds that provide financial resources to improve the quality of life in Alaska now and forever. The Alaska Community Foundation currently holds over $55 million for the benefit of Alaskans, granting $5-6 million each year to charitable projects and nonprofit organizations across the state.
Candace Winkler, President and CEO of The Alaska Community Foundation said, “The preservation of the charitable deduction in this legislation is an example of the collective efforts over the past few months of nonprofits across the country and the Council on Foundations to convey the importance of the charitable sector. We are very excited about the new legislation and look forward to assisting donors with their charitable giving over the coming year.”
For a sample letter for a direct distribution from an IRA, click here.