Posted at: 01/21/2013 9:49 PM
Updated at: 01/21/2013 10:27 PM
By: Naomi Pescovitz
Tax season officially begins January 30th, but a little known option that came out of the fiscal cliff deal is getting wide praise from charities.
The rule, also called the "IRA Charitable Rollover," allows taxpayers ages 70 and a half and older to donate up to $100,000 from their retirement funds to charity.
"They have an opportunity to still impact positively their 2012 tax return, plus help out some charities," said CPA Virginia Harn, Tax Partner with CliftonLarsonAllen.
The distribution can be excluded from gross income and is free of tax penalties. Donations made through the end of January can still be applied to 2012 tax returns.
"This allows them to take a distribution that's required out of their IRA and make a charitable contribution so they don't run into the limit," Harn said.
On Monday night 120 families were staying at People Serving People in downtown Minneapolis.
"That is beyond capacity," said Daniel Gumnit, CEO of People Serving People.
Across the Metro, the squeeze is the same.
"All of the homeless shelters in town are strained," Gumnit said.
At People Serving People, more than 60 percent of the guests are children. Most are 5 or 6 years old.
"An investment in homeless families is a proven great return on investment for our city," Gumnit said.
The IRA Charitable rollover makes that investment easier, creating a payoff for both the wealthy and those in need.
"An organization like a shelter is able to house more people at night and then help those people from a services perspective," said Kris Kewitsch, Executive Director of the Charities Review Council.
"The picture of homelessness in Minnesota is really challenging, and being homeless is a lot closer to many of us than most people could ever imagine," Gumnit said.
For more information on charitable donations, click here.