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Hurry – It’s Not Too Late for Your 2014 Charitable Gifts!

I hope that you and your family had a wonderful Christmas holiday! Before the end of the year, there are two charitable giving opportunities that I wanted to bring to your attention from a tax perspective. First, earlier this month, President Obama signed a bill that granted an extension for tax-free distributions from your IRA accounts if they are made directly to charities (the “IRA charitable rollover”). Second, in Arizona, there are at least 3 great tax credits available for contributions made to public schools (the “public school tax credit”), for contributions made to school tuition organizations for scholarships to private schools (the “private school tax credit”), and for contributions made to charitable organizations to support the working poor (the “working poor tax credit”). However, the deadline for most of these opportunities is TODAY.

How Does the IRA Charitable Rollover Work?

According to HR 5771, Section 108, if you are age 70 ½ or older, you may make a tax-free distribution from your IRA for charitable purposes as long as the transfer is made by December 31, 2014. In general, donors age 70 ½ and older may transfer up to $100,000 from their IRA to the charity of their choice, and this distribution is not subject to federal income tax. However, it is extremely important not to withdraw funds from your IRA prior to making this gift. Instead, talk to a representative from the charity about the proper forms to complete in order to make the gift tax free. However, don’t delay. The deadline is TODAY.

How Do the Arizona State Tax Credit Contributions Work?

An individual may claim a tax credit for making contributions to a public school located in Arizona for the support of extracurricular activities or the character education programs. The credit is equal to the amount of the contribution, but it cannot exceed $400 for married filing joint filers and $200 for all other filers. Taxpayers claiming this credit will use a Form 322 with their Arizona tax return. An individual may also claim a tax credit for making a donation to a school tuition organization for scholarships to private schools. The maximum credit amount that may be taken under this credit in 2014 is $528 for single, unmarried head of household and married filing separate filers and $1,056 for married filing joint filers. The tax credit for contributions made to private school tuition organizations is claimed on the Form 323. In addition, in certain circumstances, an individual may also claim an additional tax credit for contributions for private school scholarships using Form 348. Finally, the working class poor credit is also available to individuals. This tax credit is equal to the contribution made to a qualified charitable organization up to $200 for a single or head of household taxpayer and up to $400 for married filing joint return taxpayers. Taxpayers claiming this credit will do so on a Form 321. All of these forms are filed with your Arizona tax return for this year. Moreover, all of these tax credits are also deductible on your federal income tax return for this year. However, to get the most “bang” for your tax-dollar buck, it is best to make your donation by TODAY, December 31, 2014, for the 2014 tax year. If you can’t take advantage of it today, it is still possible to claim the tax credit for the private school tax credit until April 15, 2015, thought is not possible to get the federal income tax deduction for this contribution if the donation is made after December 31, 2014.

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John Even

Our firm has helped hundreds of families just like yours handle a wide variety of business planning, estate planning, probate, and elder law issues. When families or business owners are not getting along, we can also handle any disputes and litigation related to their businesses, wills, trusts, guardianships, or conservatorships. Please give me a call, so that I can help you work through these difficult issues with confidence.

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