Massachusetts Legal Blog

How To Get a Tax Break From A Charitable IRA Rollover for 2014 – Massachusetts

Congress Extends Charitable IRA Rollover Transfers for 2014
There is good news for those who are still looking for a cost effective way to give to charities and get a tax break at the same time using their IRA accounts. Congress has just extended the Charitable IRA Rollover for 2014. The law is retroactive to January 1, 2014. First enacted in 2006, the law allows for those who meet certain criteria to give to the charities that matter most to them and avoid tax liabilities before the holiday season ends.


Only those who are 70 ½ years old can reap the benefits from the IRA Rollover Transfer law. If qualified, you can only donate up to $100,000. The donation must be made directly from the IRA account to the qualified charity. The charity also can’t be a philanthropic fund, supporting foundation, split interest trust, or a charitable gift annuity. The charity must not be a donor advised fund, supporting organization, or a private foundation. The donor also can’t receive any kind of benefit in return for the charitable gift.

The Benefits

Despite the restrictions, there are many benefits to taking part in the program before the end of year deadline. First, the program gives donors the opportunity to give to charities that are important to them without having to report the withdrawal of the gift as taxable income. Typically, a withdrawal of this amount would need to be reported as taxable income and then the donor could then claim a charitable giving tax deduction. This method helps avoid the tax liability; however the donor can’t take advantage of the tax deduction either. Freedom from the income tax burden can outweigh the potential benefit of a tax deduction for charitable giving. Secondly, this form of giving also lowers the reportable income for a couple or individual. This could keep a donor from exceeding an income limit that could result in higher Medicare premiums and other tax burdens overall.

Retro action Provisions

The transfer of IRA funds to a qualified charity of choice can be done relatively quickly, actually in the same day as the request is made for many institutions. With the retro action provisions of the law, those who already gave can take advantage of the benefits as they prepare for tax season also. Anyone thinking of taking advantage of the Charitable IRA Rollover of 2014 may want to contact his or her legal professionals and financial professionals to learn more about the benefits of donating from an IRA account so he or she can take advantage of the tax breaks before the end of the year.

By Anna Shapiro.