House panel OKs tax-free charitable giving from IRAsNews added by Benefits Pro on June 3, 2014
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By Nick Thornton

A proposal to make charitable contributions from IRAs permanently tax-deductible has passed the House Ways and Means Committee.

Introduced by Aaron Schock, R-Ill., charitable contributions up to $100,000 made from IRAs would not be taxed as income. If passed into law, Americans age 70-and-a-half and older would be eligible.

Charitable giving in the U.S. totaled more than $316 billion last year, with individual donations accounting for 72 percent.

“As a nation, we must continue to incentivize charitable giving, without which the burden of meeting many community needs would overwhelm federal, state and local budgets. This bipartisan measure provides certainly for charities and increased opportunities for donors,” said Schock.

The provision had been extended in fiscal year 2012-2013 under the American Taxpayer Relief Act, but expired at the end of last year. H.R. 4619 seeks to amend the tax code permanently.

Under the previous law, qualified charitable distributions had to have been made directly from the IRA to a qualified charity, and the QCD could be used to satisfy required minimum distributions for IRAs.

Congress allowed for the temporary provision beginning in 2006.

“The IRA Rollover is a critical component of tax policy that reflects America’s long-standing tradition of charitable giving,” said Brian Gallagher, CEO of United Way Worldwide. “Yet uncertainty created by the need for Congress to continually renew this provision undermines its effectiveness in driving donations.”

The legislation was among other tax extenders passed by the House Ways and Means Committee. One bill would allow donations made after the first of the year but before April 15 to be deducted from the previous year. A flat-tax of 1 percent for charitable organization has also been proposed.

The Senate is considering its own host of tax-extenders. President Obama has often articulated the need for all tax breaks to be paid for in the budget.

Originally published on BenefitsPro.com
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