Although various media sources referenced a “cap on itemized deductions for individuals with incomes above $250,000 and household income over $300,000” what was actually included in the bill was a reinstatement of the Pease limitation for those taxpayers exceeding those thresholds, not an actual cap on itemized deductions.
Under the Pease amendment, income over the applicable amount will trigger an itemized deduction (including the charitable deduction) limitation that is the lesser of (a) 3 percent of the adjusted gross income above the applicable amount, or (b) 80 percent of the amount of the itemized deductions otherwise allowable for the taxable year.
The 2001 tax act eliminated the limitation for 2010, so that all taxpayers got the full value of their itemized deductions that year, and reduced the Pease limitation by one-third in 2006 and 2007, and by two-thirds in 2008 and 2009, before repealing it entirely for 2010.
Additionally, the tax extenders package, which includes the IRA Rollover provision, was included in the fiscal cliff bill. The IRA Rollover provision permits individuals ages 70½ and older to give direct gifts up to $100,000 to qualified public charities from their Individual Retirement Accounts (IRAs) without tax penalty.
The bill’s language extends the tax deadline to Feb. 1, 2013 for the IRA Rollover provision, meaning that IRA gifts made between Dec. 31, 2012 and Feb. 1, 2013 would be counted for the 2012 tax year. It also allows people who made otherwise qualifying transfers from IRAs to charity in Dec. 2012 to treat the transfers as eligible rollovers.
Your NCMS Foundation is off to a strong start in 2013, providing greater access to primary care for those most in need in NC and providing members with leadership skills training through the Kanof Institute for Physician Leadership and the NCMS Leadership College. Your contributions allow us to continue this valuable work. Visit http://www.ncmsfoundation.org/ to give on-line or contact Pam Highsmith firstname.lastname@example.org to learn more.
Excerpted from Association of Fundraising Professionals’ eWire, Volume 13, Number 1, January 2, 2013