If you donate to charity, you may get a break due to the passing of a two-year extension of IRA Charitable rollover legislation by the U.S. House of Representatives.
As part of the Emergency Economic Stabilization Act of 2008, a provision in the new federal law allows taxpayers who are 70.5 years or older to bypass the income tax when giving retirement savings directly to charity.
Karen VanHouten, executive director of the Community Foundation of Orange and Sullivan, called it a “win-win for people who would rather give to charity than pay taxes and the nonprofit organizations they choose to support.”
The provision, which was first enacted for 2006 and 2007, extends through 2009 and extends the option of transferring IRA assets directly to a qualified public charity. The money is not included in the owner”™s income and thus is not taxed, allotting the full amount for the designated charitable organization.
“This really is a limited-time offer,” VanHouten said. “The window is open now, but will close by the end of 2009. For anyone interested in establishing a permanent legacy in their community; this is the opportunity of a lifetime.”
Throughout 2008 and 2009, those meeting the age requirement can make direct charitable transfers up to $100,000 per year. A single person may transfer $200,000 free from federal tax and a married couple; up to $400,000 from separate accounts.
An estimated $4.7 trillion is invested in IRAs as a result of regular investments and long term returns.
