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Tax-Free Transfers to Charity in January 2013 Can Still Count for 2012 For IRA Owners 70 or Older

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John R. Dundon II, EA
John R. Dundon II, EA

Two weeks notice isn't really sufficient don't you think?  

According to the IRS IRA owners age 70½ or older have until Thursday, Jan. 31 2013 to make a direct transfer, or alternatively, if they received IRA distributions during December 2012, to contribute, in cash, part or all of the amounts received to an eligible charity.The American Taxpayer Relief Act of 2012, extended for 2012 and 2013 the provision authorizing qualified charitable distributions (QCDs)—otherwise taxable distributions from an IRA owned by someone, 70½ or older, paid directly to an eligible charitable organization. Each year, the IRA owner can exclude from gross income up to $100,000 of these QCDs.The QCD option is available regardless of whether an eligible IRA owner itemizes deductions on Schedule A. Transferred amounts are not taxable and no deduction is available for the transfer. QCDs are counted in determining whether the IRA owner has met his or her IRA required minimum distributions for the year.For tax-year 2012 only, IRA owners can choose to report QCDs made in January 2013 as if they occurred in 2012. In addition, IRA owners who received IRA distributions during December 2012 can contribute, in cash, part or all of the amounts distributed to eligible charities during January 2013 and have them count as 2012 QCDs.QCDs are reported on Form 1040 Line 15. The full amount of the QCD is shown on Line 15a. Do not enter any of these amounts on Line 15b but write “QCD” next to that line.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.

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.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 via 2013 Form 1099-R.

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.


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