Category Archives: Charity

Natural Disaster Relief: Hurricane Florence

What does the IRS do to help with natural disaster relief?

We just watched Hurricane Florence slam the Carolinas, and last year’s hurricane season between Hurricane Harvey, Hurricane Irma and Puerto Rico’s Hurricane Maria were devestating. The last several years the IRS has typically acted to provide taxpayer relief for natural disasters such as hurricanes Kartina and Rita, the 2014-2015 record snow fall in New England, the 2010 New England floods, Hurricane Sandy, Hurricane Matthew, the Ebola Outbreak in 2014, and the 2010 Hatian earthquake. As you read this you would think we were facing the end, but thank goodness there has been help from the IRS. The typical measures often include delaying various filing deadlines, delating various payment deadlines, loosening rules for write offs for damage, and allowing for certain charitable contributions.

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Natural Disaster Relief: Hurricanes Harvey, Irma

What is the IRS doing to help with natural disaster relief?

We are getting hit with a one-two punch this hurricane season between Hurricane Harvey, Hurricane Irma and who knows what else will hit. The last several years the IRS has typically acted to provide taxpayer relief for natural disasters such as hurricanes Kartina and Rita, the 2014-2015 record snow fall in New England, the 2010 New England floods, Hurricane Sandy, Hurricane Matthew, the Ebola Outbreak in 2014, and the 2010 Hatian earthquake. As you read this you would think we were facing the end, but thank goodness there has been help from the IRS. The typical measures often include delaying various filing deadlines, delating various payment deadlines, loosening rules for write offs for damage, and allowing for certain charitable contributions.

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Time-Share Use as a Charitable Deduction?

Have you ever considered your time-share use as a charitable deduction? If you have ever attended a charity auction, it is not uncommon. Often you may see a week’s use of a time-share included in the items donated for auction. The time-share owners who donate these weeks do so in hoping to be able to take charitable donation deduction on their tax returns. Continue reading

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Charitable Contribution: Tax Plan for Potential IRA-to-Charity Provision

2015_09_03 Charity, donation3Are you are 70.5 or over? Have you not taken all or any of your 2015 required minimum distribution (RMD) from your IRA? Do you plan to but have not yet made a significant charitable contribution? Here is a tip that could save some tax dollars.

In previous years, there has been a tax provision allowing an individual age 70.5 or older to make a direct transfer of money. This transfer could be up to $100,000, from his or her IRA account to a qualified charity. That provision expired on December 31, 2014. However, Congress has extended that provision in the past. There is a good chance it may be extended again. In fact, the Senate Finance Committee working group on individual tax reform, just recently, recommended extending the provision.

What if Congress Does Not Extend the Charitable Tax Plan Contribution?

If Congress does not extend it, you will have still satisfied your minimum distribution requirement. The amount transferred to the charity will still count as a charitable contribution. If Congress does extend it, you can take advantage of the tax benefits described later in this article.

If you wait to see whether the provision will be extended, and Congress waits until the last minute, you may not have time to take action. This was the case for most taxpayers last year. You may have already taken your RMD or made that charitable contribution.

What happens if the provision is extended?

If the provision is extended, here is how it will play out on a tax return:

  1. The distribution is excluded from income;
  2. The distribution counts towards the taxpayer’s Required Minimum Distribution for the year; and
  3. The distribution does NOT count as a charitable contribution.

At first glance, this may not appear to provide tax benefits. However, by excluding the distribution, a taxpayer lowers his or her income (AGI) for other tax breaks pegged at AGI levels such as medical expenses, passive losses, taxable Social Security, etc. Those who do not itemize essentially receive the benefit of a charitable contribution to offset the IRA distribution.

Would you like more information how to maximize your tax benefit based on a charitable contribution?

If you think that this tax provision may affect you. Would you would like to explore the possibilities with some tax planning? Alex Franch, BS EA at 781-849-7200.

You can read more about the potential IRA-to-Charitable Tax plan contribution from 2014 here.

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