Philanthropy Tax E-Letter

IRA/Charitable Rollovers - How to Report the "Election"

 

For information about Conrad Teitell’s publications and lectures visit: taxwisegiving.com. For information about Cummings & Lockwood visit: cl-law.com.

 

Background. The tax-free IRA/charitable rollover was extended retroactively for 2012 and expires at the end of 2013. The benefit is available for all of 2012 for the rare donors who made direct distributions to charity from their IRAs before the retroactive extension for 2012 was enacted. An election is available for some donors. They can avail themselves of the tax-free IRA/charitable rollover if they took distributions in December 2012. Yet another election is available to all taxpayers who took action by Jan. 31, 2013. Back reference. See "Charitable/IRA Tax-Free Distributions Redux ... American Taxpayer Relief Act of 2012," for an explanation of the election; plus all the rules governing charitable/IRA rollovers.

 

IRS’s news release on reporting Qualified Charitable Distributions (QCDs):

 

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.

IR-2013-6 (Jan. 16, 2013), http://www.irs.gov/Retirement-Plans/Charitable-Donations-from-IRAs-for-2...

 

© Conrad Teitell 2013. This is not intended as legal, tax, financial or other advice. So, check with your adviser on how the rules apply to you.

 

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Conrad Teitell

Conrad Teitell, A.B., LL.B., LL.M., 98.6. Chairman, National Charitable Planning Group, Cummings & Lockwood, Stamford Conn. cl-law.com. For information about Conrad Teitell's publications...
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