CHPA College Development Report
By Bob Beumer
Once again it is April, Income Tax time is here! CHPA may have a solution to your Income Tax woes. Have you ever thought of endowing a scholarship for a student with academic merit or financial need or giving a gift to support a program or faculty member, but just did not know how you would be able to do it or the best way to achieve the highest tax deduction?
Charitable IRA rollover legislation recently enacted by the federal government may benefit you in the current tax year and help you realize a dream of making a tax free gift to an organization like Missouri State University.
The law allows the owner of an IRA to make a gift directly to a qualified charity and avoid the taxes on the distribution. If you are 70 ½ years old and interested in learning more about the charitable IRA rollover provision, please contact Bob Beumer, Director of Development, at 417/836-4547 or email@example.com.
Congress has opened a narrow window of opportunity; the provision for a charitable IRA rollover expires December 31, 2007.
Charitable IRA Rollovers: Frequently Asked Questions
Q: Who can exclude IRA distributions from taxable income?
A: The exclusion applies to individuals who have reached age 70½ by the date of their contribution.
Q: How much can I give and still take advantage of the tax-free benefits of the new law?
A: The maximum amount that can be excluded from an IRA owner's income is limited to $100,000 per taxpayer per year.
Q: My spouse also has an IRA and meets the age requirement. Can we both take advantage of the charitable rollover option in the same year?
A: Yes. The amount that can be excluded from income is limited to any amount up to $100,000 per taxpayer. As a married couple you can together donate up to $200,000 provided that each of you owns at least one or more IRAs and has reached age 70½.
Q: If I give to Missouri State University Foundation using funds from my IRA, do I qualify for a tax deduction on that amount?
A: No. The Charitable IRA Rollover allows individuals to avoid paying income taxes that were never paid when the funds were deposited.
Q: If I elect to make a qualified charitable distribution to Missouri State University Foundation from my IRA, will I be required to itemize my deductions at tax time?
A: No. If you are part of the nearly 60 percent of taxpayers who elect the standard deduction at tax time, this new giving option will not change that for you. However, if your account includes non-deductible contributions, you may be able to take a charitable deduction on that amount. To guarantee the most favorable tax treatment of your donated IRA assets, please consult your financial advisor.
Q: Can I use funds withdrawn from other qualified tax-deferred retirement accounts such as a 403(b) or 401(k) type plan?
A: No. The provision only provides a benefit for owners of an IRA or Roth IRA.
Q: Do I have to pay capital gains tax on the amount that I give from my IRA?
Q: Can I use the qualified charitable distribution to create a trust or gift annuity or another life income agreement from which I would benefit?
A: No. Only outright cash gifts qualify for this benefit.