With year end fast approaching, a
reminder of the provisions related to
charitable giving as set forth in the Katrina
Emergency Tax Relief Act (KETRA) and
other relevant statutes may be in order.
Cash (or check) contributions to public
charities made from August 28 through
December 31, 2005 will not be restricted
to 50% of a taxpayer's adjusted gross
income as was the case before KETRA. In
fact, these contributions are not even
required to go toward Katrina relief
efforts.
A married couple may gift up to $22,000
in 2005 ($11,000 for an individual)
without incurring gift taxes – and there are
no tax consequences for the recipient. This
is a "use it or lose it" proposition – after
December 31, 2005 passes, the 2005
opportunity is gone. Effective January 1,
2006, the annual exclusions increase to
$24,000 for married taxpayers and
$12,000 for individuals.
Taxpayers can make payments for eligible
education and medical expenses for
another individual in addition to the
exclusions referenced above. Payments
must, however, be made directly to the
institution, i.e., the school or medical
provider.
If you plan to make gifts in 2005 and
haven't done so, please act soon. To
qualify as a 2005 gift, recipients must cash
checks prior to January 1, 2006.
Source: Forbes.com, 12-5-05
