IRA tax-free charitable contributions. Individuals age 70½ and older are generally required to withdraw money from their traditional IRAs and pay income tax on each distribution. But retirees in the fortunate position of not needing the money they have stashed away in their IRA can avoid paying income tax on their required withdrawals by donating up to $100,000 of their distributions to charity. To qualify for the tax break, charitable distributions for 2013 must be paid directly from the IRA to a qualified charity by the end of the calendar year.
[Read: Understand Your Rollover Options.]
Saver's credit. Low- and moderate-income people who save for retirement in a 401(k) or IRA are eligible to claim the saver's credit, which can be worth up to $1,000 for individuals and $2,000 for couples. People age 18 and older who are not full-time students or dependents on someone else's tax return can claim this tax credit until their income exceeds $29,500 for singles, $44,250 for heads of household, and $59,000 for couples in 2013. The credit is calculated based on up to $2,000 of retirement account contributions and your income, with the biggest tax credit going to retirement savers with the lowest incomes. For example, a married couple earning $30,000 that contributed $1,000 to an IRA would get a $500 credit. But few people get that much. Among the 6.1 million income tax returns that claimed the saver's credit in 2010, the credits averaged $204 for couples, $165 for heads of household, and $122 for individuals. There's still time to claim the saver's credit on your 2012 tax return. Workers have until April 15, 2013, to make an IRA or Roth IRA contribution that will qualify them for a tax-year 2012 saver's credit.