New option for charitable giving

If you are age 70 1/2 or older, there is another option for you to consider when making charitable contributions. Beginning after December 31, 2005, you may be allowed to make a charitable contribution of up to $100,000 of distributions from your IRA. Although there is no charitable contribution deduction allowed,

you are not required to include the distribution in your income for the year the donation is made. This option is limited and may not be the best option for some taxpayers. First, the charitable contribution distribution is allowed from 2006 through 2013, with the maximum contribution limited at $100,000. The taxpayer must be over the age of 701/2 and currently taking his or her required minimum distributions. Only the distributions that are otherwise required to be included in income are eligible for the charitable contribution distribution. The distribution must be made to the charity by a trustee directly to the charity. This means that a distribution that is made to the IRA owner and then turned over to the charity, does not qualify.

Using this option to reduce the balance in your IRA can be a valuable estate planning tool. The value of your IRA is required to be included in your estate at death. Currently estates with a value in excess of $5 million are subject to estate tax. Contributing some of your IRA to a charity while you are still living is an effective way to reduce your taxable estate.

Tax Tips Small Business

  • Starting Your Own Business?

    Here are a few quick tips to help you reduce taxes

    Open a separate business checking account. Many small business owners don't realize the complications that can arise from using their personal checking account to pay for business expenses. If business expenses are mixed in with personal expenses, the IRS may disallow them.

    Read more ...

Small Business Quick Tip

  • Business Credit Card

    Use your credit card to buy equipment and supplies that you will need in the upcoming year. Charges on your credit card for deductible business expenses are allowed in the year you make the purchase, not in the year the charge is paid. Pay off your credit card after the beginning of the year and avoid finance charges.
Saturday, 21st July 2018
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Tax Tips Personal

  • Giving to Charity

    New rules require diligent recordkeeping
    Keeping the receipts from your charitable contributions just became more of a priority. Starting January 2007, you will not be allowed to deduct charitable contributions of any amount unless you have the proof. What does this mean for you? Starting in 2007,

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Personal Quick Tip

  • Medical and Charitable Mileage

    Do you use your auto for charitable purposes? What about going to and from the doctor or dentist? Your mileage for both medical and charitable purposes may be deductible on your tax return. It is important to set up a mileage log and keep it handy so you can track your deductible mileage throuhghout the year.