Dec 31: Last Day for I.R.A. Gifts - New York Estate Planning News

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Dec 31: Last Day for I.R.A. Gifts

People that are 70 1/2 years or older have until Dec. 31 to make charitable donations of up to $100,000 directly from their I.R.A.'s, reports the New York Times.

Just as background, an I.R.A. is an account in which a person may deposit up to a stipulated amount each year and that is not taxable until retirement or early withdrawal.

So what do you stand to gain from giving a gift directly from an I.R.A. as opposed to taking the money out and then gifting? Well, the answer is that if you take money out of the I.R.A. you could end up in a higher-tax bracket because it looks like you have a higher income. By giving a gift directly from the I.R.A. (which is a sort of tax-free haven) you would be able to give gifts much larger than those you are otherwise able to give.

Of course, due to various tax related issue, the last day to pull off an I.R.A. gift is Dec. 31.

Charitable contributions, also known as charitable donations, are gifts made to qualified organizations that have obtained 501(c)(3) tax status, such as educational institutions, religious organizations, government entities, and other charities. Qualified organizations typically receive most of their funding and support from gifts, grants and contributions from the public.

From a tax perspective, charitable contributions are tax-deductible. Taxpayers may lower their yearly taxes by claiming an itemized deduction on their tax return based on the cash or fair market value of the donation, subject to a few limits. Because charitable contributions are tax deductible, taxpayers often increase their charitable donations during the holidays or before the end of the year.

Or, with an I.R.A. gift, in old age. But, like age, time is running out.

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