In an effort to encourage more end-of-year charitable giving, Congress has passed a law that waives the restrictions on the use of charitable income tax deductions on certain gifts of cash made between Aug. 28, 2005, and Dec. 31, 2005.
The Katrina Emergency Tax Relief Act (KETRA) includes special incentives for donors by allowing them to deduct certain cash gifts up to 100% of their adjusted gross income until the end of 2005. KETRA waives the rule that typically limits the use of charitable deductions to 50% of a donor’s adjusted gross income. While the year-end gift is not limited to Katrina relief, the gift must be made to public charities, such as Elon University, between Aug. 28 and Dec. 31, 2005.
Additionally, IRA and similar retirement plan withdrawals from donors over age 59 1/2 that are given to a public charity will be fully deductible. Normally, when a person over age 59 1/2 withdraws funds from his or her IRA, the withdrawal is included in the IRA owner’s taxable income. Under the new KETRA law, the withdrawn funds may be given in full to charity; the full gift will then be deductible.
Check with your financial advisor about the ways you can take advantage of this special opportunity to benefit you and your favorite charities.
If you have any questions, please contact Bea Sanford, Director of Gift Planning, at bsanford@elon.edu or 336-278-7454.