The new PATH tax extenders legislation makes the Qualified Charitable Distribution (QCD) rules permanent at their existing levels and thresholds, currently capped at $100,000 per taxpayer who must be over age 70½ at the time of the distribution.

Since 2006, taxpayers who are over age 70½ have been permitted to make a Qualified Charitable Distribution (QCD) up to $100,000 directly from an IRA to a charity. The contribution to the charity is not claimed as a tax deduction but the distribution from the IRA is not taxed as income either, which makes it an ideal pre-tax charitable contribution. The QCD also counts toward the taxpayer’s Required Minimum Distribution (RMD) obligations, which do apply given that he or she must already be over the age of 70½. The QCD rules had lapsed at the end of 2014.

Other PATH Act Changes:

• 529 Plans now allow computer purchases and several other small expenses
• American Opportunity Tax Credit ($2,500 education credit) has been made permanent
• State and local sales taxes can be used as deductions if above state and local income taxes. This is very helpful for states with no income tax: Florida, Texas, and others
• For Business Owners: the section 179 expensing was made permanent. Please see your tax advisor for more details as he or she will be very happy to review with you!