Tax-Free Charitable Donations: Here’s How

Al Harsar, CPA gives a tip on donating to charities tax-free:



Good news for those who donate to charities!

With the PATH Act of 2015, our government finally made permanent a beneficial part of the code for 501(c)(3) Tax Exempt Organizations: the ability for an individual to roll over a portion of their Traditional (taxable) IRA directly to a charity of their choice- tax free!

The donor does not have to cash out the IRA and pay tax on it before donating the proceeds.  Instead, they are able to roll it over at the gross amount and save the taxes on the value being transferred.  In recent years, this provision in the code has been in extender bills, but taxpayers have had to wait until late December for the bill to pass. This made it very hard for tax planning and charitable giving, so the permanent passage is appreciated by those that like to support charities.

If you want to talk more about not-for-profit organizations, please contact me!