|You can still make charitable contributions of money from your IRA, but the new year brought new rules.|
Under the expired provision, if you qualified you could make a direct distribution from your IRA account to the qualified charity of your choice and, when ready to file your tax return for the year, not include the amount of the direct distribution to the charity as income. This could also include your Required Minimum Distribution for the year, as well. By doing this, you didn't have to recognize this income at all -- which doesn't seem so important until you see how it works in the new way. The new way
Now that the QCD provision has expired, you can still make charitable contributions from your IRA, but it's not as advantageous as the old way. Under this method (which can be enacted by anyone over age 59.5 without penalty) you take a distribution from the IRA, then send it to the charity of your choice. (In actuality, the distribution doesn't have to be from an IRA, but we're doing a compare and contrast against the expired QCD arrangement, so that's what we'll use for the examples.) Now when you get around to filing your tax return for the year, you'll have to recognize the distribution from your IRA as income. Later on in the return you can include the charitable contribution as an itemized deduction, eventually lowering your taxable income by the same amount. Since you have to include the distribution as income, though, this will increase your overall income (unless you have net operating losses from your business to offset the income), and will therefore also increase your adjusted gross income (the bottom line of your Form 1040). The significance to this is that many tax provisions depend upon the adjusted gross income figure.