Hurricane Katrina Tax Relief Bill
(KETRA) Benefits Charitable Donors
While the majority of the $6.1 billion tax relief act focuses
on providing tax relief to victims of Hurricane Katrina, KETRA also contains
incentives for charitable giving.
The act suspends limits on individual and corporate tax
deductions for cash contributions (appreciated assets don’t qualify) made to
public charities, such as the CFIDS Association of America, between August 28 and
December 31, 2005.
Prior to the act, individuals could deduct charitable
donations only up to 50% of their adjusted annual gross income. Under the new
provision, cash donations made to eligible charities are exempt from both the
50% limitation and the phase-out of itemized deductions. Eligible taxpayers now
have the one-time opportunity to make tax-deductible contributions of up to 100%
of their adjusted gross income.
According to Senator Charles Grassley of
Iowa
, one of the
Act’s authors, “My hope in passing this provision is that American’s generosity
for those harmed by Hurricane Katrina won’t mean a trade-off for other important
charitable work in this country.”
In order to qualify for the tax break, a donation given to the
CFIDS Association -- or any other qualified tax-exempt public charity -- and
must meet three rules:
- Gifts must be made in cash.
Appreciated assets do not qualify.
-
Gifts must be made between August 28 and December 31,
2005.
-
Gifts must be made to a public charity, excluding gifts
made to donor-advised funds, to supporting organizations and to private family
foundations.
To learn more about KETRA, please visit
http://www.house.gov/jct/x-69-05.pdf.
State and local tax rules could minimize the benefits of KETRA. If you are
contemplating a gift with significant tax implications, involve your tax
advisor.
The CFIDS Association of America does not provide financial or
tax advice and strongly urges you to consult your attorney, financial planner or
accountant regarding specific tax and financial implications of your charitable
contributions.
