taxes

The joint committee on deficit reduction appears to be stalled, with the deadline this month for them to have proposed sweeping changes to avoid automatic cuts in government spending. As of this writing, it is still up in the air whether the committee will actually produce any recommendations.

Regardless of the ineffectiveness of the committee, there is one important part of the tax code that was on the table for possible revision and you need to know about it. In exchange for the permanent reductions in the marginal tax rates set by congress, Republicans are now willing to consider the elimination of certain tax deductions. Among them is the tax deduction for charitable contributions.

While details have not been determined, two options under consideration include:

It is still possible to make charitable contributions from your IRA, but the opportunity is set to expire December 31, 2011 unless the government acts to extend it. The provision originally expired at the beginning of 2010, but was reinstated as part of the 2010 Tax Act. Here are the details that you need to share with those who are in the qualifying age bracket:

• The provision allows someone over 70 1/2 years of age to donate up to $100,000 of their IRA assets to a charitable organization.
• The donor's contribution can satisfy the required minimum distribution for the year and does not have to be counted as taxable income.
• Those who qualify to make this gift need to seek counsel from their tax attorney or licensed financial planner for the details.

You would be wise to make those in your church who meet the age qualification aware of this opportunity to support your ministry in this way.

A recent Forbes article offers additional information - you can read it here. 

Another provision under the Bush tax cut legislation involves the reinstatement of a very popular benefit for those age 70 1/2 and older. The provision expired at the beginning of 2010, but has now been reinstated. Here are the details that you need to share with those who are in the qualifying age bracket:

• The provision allows someone over 70 1/2 years of age to donate up to $100,000 of their IRA assets to a charitable organization.
• The donor's contribution can satisfy the required minimum distribution for the year and does not have to be counted as taxable income.
• Those who qualify to make this gift need to seek counsel from their tax attorney or licensed financial planner for the details.

The Wall Street Journal did a nice article on this provision which you can read here.

Here's a point of URGENCY - through January 31, 2011, the donor can make a gift that still counts for 2010. This means the individual can make an IRA contribution this month that counts for 2010, then make a second contribution later this year for 2011. Get this news out to your congregation and constituents as soon as possible!