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IRA Charitable Rollover

POSTED ON December 22nd, 2015  - POSTED IN Tax Benefit

Orig post | Re-Post Sports World 12/22/2015

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The House and Senate have passed the Protecting Americans from Tax Hikes (PATH) Act, which makes permanent three charitable giving tax incentives which have been expired since January 1, 2015, including the IRA charitable rollover.

The IRA Charitable Rollover provision allows individuals who have reached age 70½ to donate up to $100,000 to charitable organizations directly from their Individual Retirement Account (IRA), without treating the distribution as taxable income. The provision is part of a package of 55 temporary tax extenders that were reinstated retroactively for only the 2014 tax year, but expired again on January 1, 2015.

Congress passes tax bill including permanence for three charitable giving incentives
Following House passage of a tax bill including numerous permanent extenders and the Fiscal Year 2016 Omnibus spending bill, the Senate passed by a vote of 65 to 33 a larger package combining the two pieces of legislation. The House had earlier voted 318 to 109 in support of the extenders measure, with 77 Democrats joining all but three of their Republican colleagues in voting yes. The Omnibus bill, which also includes a two-year delay in implementation for the so-called “Cadillac tax”, enjoyed greater bipartisan support, with 166 Democrats joining 150 Republicans to pass the bill by a vote of 316 to 113. Following approval of a unanimous consent agreement yesterday, Senate Majority Leader Mitch McConnell was able to bring the expansive measure to the Senate floor under expedited procedures which allowed for very quick votes.

Broad tax extenders bill released, includes permanence and enhancements for charitable provisions
On December 16, following a late-night House Republican conference meeting the night before, House Ways And Means Chair Kevin Brady (R-TX), Senate Finance Committee Chair Orrin Hatch (R-UT) and ranking member Ron Wyden (D-OR), jointly announced a deal on a broad tax extenders package which would make a number of provisions, including the three charitable giving incentives, permanent. Further, the provisions relating to donations of land conservation easements and excess food inventory would both be enhanced and expanded. Other provisions would be reinstated through 2019, reinstated through 2106, or in some cases, gradually phased out. In a press release issued by the three taxwriters, Wyden noted that “this bill highlights clear priorities for reforming our tax system. … Charities can confidently plan and expand the good work they do.” While the current bill (the Protecting Americans from Tax Hikes Act or PATH Act) enjoys support from both Democrats and Republicans in the Senate, and Republicans in the House, support from House Democrats is less certain. Democratic Leader Nancy Pelosi (D-CA) and Democratic Whip Steny Hoyer (D-MD) have both been vocal about their opposition to the emerging extenders package, and House Ways and Means Committee Ranking Member Sander Levin (D-MI) did not join the other three taxwriters in announcing the release of the PATH Act. The process for floor consideration is yet to be announced, but previous indications had been that the House might vote separately on the extenders package and the omnibus bill, which was released at the same time, and then package the two together to speed consideration in the Senate.

Independent Sector and 19 other nonprofits urge immediate Congressional action on charitable giving incentives
Independent Sector and the Council on Foundations, supported by 18 other leading philanthropic and charitable organizations, sent a letter on October 21 calling for swift legislative action, urging Congress to take immediate steps to make permanent the three currently expired charitable giving incentives that are part of the tax extenders package. Collectively representing tens of thousands of charities and foundations across the charitable sector, these organizations reiterated that that without incentives permanently reinstated, “many of the donations the incentives were intended to promote will simply not take place.”

Independent Sector joins national coalition of over 2,000 urging Congress to act
Independent Sector, along with a broad national coalition of over 2,000 businesses, associations, and other charitable organizations recently signed onto a joint letter to Congress asking that they restore seamlessly the expired tax provisions, and make permanent those for charitable giving. IS continues to fight for permanent extension of these giving incentives, and thanks all those who answered our call to add their name to this letter, as we partner with a diverse range of industries to urge Congress to take decisive action.

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Tax Benefits of Giving

POSTED ON December 16th, 2015  - POSTED IN Tax Benefit

Orig Post | Re-Post Sports World Inc. 12/16/2015

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The following is a brief summary of certain federal income tax laws for informational purposes only. We urge you to consult your tax advisor for the federal, state, and local tax consequences of a charitable contribution.

Benefits to You of Giving to Charity

While we believe at Charity Navigator that your primary motivation to donate to charity should be altruism, we also think you should know that great tax benefits exist for those who give. Here are some of the benefits you should know about.

  • A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. If the gifts are deductible, the actual cost of the donation is reduced by your tax savings. For example, if you are in the 33% tax bracket, the actual cost of a $100 donation is only $67 ($100 less the $33 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets. The actual cost to a person in the lowest bracket, 15%, for a $100 contribution is $85. For a person in the highest bracket, 35%, the actual cost is only $65. Not only can the wealthy afford to give more, but they receive a larger reward for giving.
  • A contribution to a qualified charity is deductible in the year in which it is paid. Putting the check in the mail to the charity constitutes payment. A contribution made on a credit card is deductible in the year it is charged to your credit card, even if payment to the credit card company is made in a later year.
  • Most, but not all, charitable organizations qualify for a charitable contribution deduction. You can deduct contributions only if they are made to or for the use of a qualified recipient. No charitable contribution deduction is allowed for gifts to certain other kinds of organizations, even if those organizations are exempt from income tax. Contributions to foreign governments, foreign charities, and certain private foundations similarly are not deductible. Below, you can view a list of organizations for which your donations can be deducted. All organizations rated by Charity Navigator qualify for charitable status, and you can deduct your donations, subject to certain limitations.

An organization could lose its charity status if it devotes a substantial part of its activities to formulating propaganda or otherwise trying to influence legislation. However, an organization, other than a church, may qualify as a charity and still perform some of these activities by keeping its political expenditures to an “insubstantial” part of its activities. Furthermore, donations to needy individuals are not deductible.

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