New Tax Law Extends Planned Giving Opportunity for Charities

Dec. 29, 2010 - PRLog -- Though the economy hasn't been good to most charities lately, a relatively unnoticed provision in the tax relief legislation signed by President Obama this week may help, according to NJ CPA Nick Magone, managing partner of NJ CPA firm Magone & Company.

Says Magone, “The legislation extends the charitable contribution of IRA distributions through the end of 2011. Under this provision, an IRA owner who is age 70-1/2 or older can directly transfer tax-free up to $100,000 per year to an eligible charity. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. Amounts transferred are not taxable and no deduction is available for the transfer.”

However, Magone advises, amounts transferred to a charity are counted toward the owner's IRA required minimum distribution for the year. He explains, “The required minimum distribution is the amount which must be taken by the owner of the IRA in order to avoid a 25% excise tax penalty.”

IRA charitable contributions through January 31, 2011 will count toward the calculation of the owner's required minimum distribution for the 2010 year. Even if the individual has taken the required minimum distribution in 2010, they may find the favorable tax treatment for this charitable contribution from the IRA attractive.

Magone, whose firm performs considerable work for NJ non-profits, including Yellow Book and A-133 audits and preparation of financial statements, suggests that charities alert their donors regarding this favorable tax treatment. “Who knows, the tax savings may mean this holiday season could be filled with cheer for your organization after all.”

For  more information on the latest tax provisions and their implications, consult your tax professional or contact Magone & Company at (973) 301-2300

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About Magone & Company
Headquartered in Florham Park, the NJ CPAs at Magone & Company, P.C. bring a unique 360° perspective to the practice of accounting and business consulting. The firm supports leading entrepreneurial companies, non-profit organizations, professional services firms, hedge funds, and the real estate industry with a complete range of accounting, audit & attestation, tax, wealth management, and business consulting services. For more information, visit http://magonecpas.com.