2008 Treatment of IRA Distributions Donated To Charity

The Emergency Economic Stabilization Act of 2008 (federal Public Law 110-343) extended for 2008 and 2009 the federal provision that provides that individuals aged 70 ½ or older can distribute up to $100,000 of their IRA balance to charitable organizations without recognizing income and without taking a charitable deduction.

As of February 24, 2009, this provision of P.L. 110-343 has not been adopted for Wisconsin tax purposes. When filing their 2008 Wisconsin income tax returns, taxpayers who donated an IRA distribution to charity must complete 2008 Wisconsin Schedule I to include the IRA distribution in Wisconsin income. To calculate the Wisconsin itemized deduction credit, use the amount of charitable deduction that would have been allowed on federal Schedule A without considering P.L. 110-343.

The Wisconsin Legislature is currently in session. Adoption of several federal public laws are being considered during this session. It will probably not be known until June whether this provision relating to IRAs will be adopted retroactively for Wisconsin. If this provision is adopted retroactively for Wisconsin, taxpayers who included in income an IRA distribution that was donated to charity may file an amended return (Form 1X) to remove such amount from income and to adjust the itemized deduction credit.

Last updated March 6, 2009