Tax-free IRA rollovers to eligible charities have been extended!

IRA owners, age 70 ½ or older, can transfer tax-free up to $100,000 for both 2012 (by February 1, 2013) and 2013 to eligible charities. A QCD can be used to satisfy any IRA required minimum distributions (RMDs) for the year.

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.

2012 QCDs Made in January 2013

An IRA owner can treat a contribution made to a qualified charity in January 2013 as a 2012 QCD in either of the following circumstances:

  • The contribution is a cash contribution to the charity of all or a portion of an IRA distribution made to the IRA owner in December 2012, provided that the contribution would have been a 2012 QCD if it had been paid directly from the IRA to the charity in 2012.
  • The contribution is paid directly from the IRA to the charity, provided that the contribution would have been a 2012 QCD if it had been paid in 2012.

IRA owners should keep records to substantiate the timing of contributions and distributions regarding any 2012 QCD made in January 2013.

Reporting

Form 1099-R – IRA trustees must report distributions as follows:

  • Distributions made in 2012 are reported on a 2012 Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; and
  • Distributions made in 2013, including any 2012 QCDs made in January 2013, are reported on a 2013 Form 1099-R.

Form 1040 – IRA owners must report 2012 QCDs made in January 2013 on their 2012 Form 1040 by:

  • including the full amount of the 2012 QCD (even if in excess of $100,000) on line 15a; and
  • not including any amount on line 15b, but writing “QCD” next to line 15b.

Note. A 2012 QCD made in January 2013 must also be reported on the IRA owner’s 2013 Form 1040. These reporting requirements will be reflected in the 2013 Instructions for Form 1040.

IRA owners must file a 2012 Form 8606, Nondeductible IRAs, with their 2012 Form 1040 if:

  • the 2012 QCD was from a traditional IRA, there was basis in the IRA owner’s traditional IRA(s), and the IRA owner received a distribution from a traditional IRA in 2012, other than the 2012 QCD; or
  • the 2012 QCD was from a Roth IRA.

If a 2012 Form 8606 must be filed, the instructions to the form will describe how to report any 2012 QCD made in January 2013.

As always, if you have any questions about this or any other matter, please contact us at JMF and we will be happy to assist you.