Date: December 5, 2005
Members of the Andrews University community have been generous in their efforts to bring relief to the victims of Hurricanes Katrina and Rita over the past few months, joining countless others across the country.
Due to the increasing amount of donations given this year to hurricane relief efforts, Congress recently signed into effect the Katrina Emergency Tax Relief Act of 2005, which allows donors to contribute more than what would normally be deductible in a single tax year. While individuals can normally deduct charitable contributions in amounts up to 50 percent of their adjusted gross income, under the new Katrina tax act, cash gifts made to qualifying charities between August 28 and December 31, 2005 can now be deducted in amounts up to 100 percent of their adjusted gross income.
A qualifying charity is defined as any entity that is allowed to receive tax-deductible contributions other than private foundations, donor advised funds, charitable remainder trusts and similar gifts under which a donor retains income. This includes all gifts made to Andrews University.
Donors that give from their IRAs or other retirement accounts, will also receive special breaks under the new tax law. Donations from retirement accounts made by donors over 59.5 years of age do not have a 10% penalty fee for early withdrawal. For some taxpayers, however, the limits on deductible amounts, coupled with other reductions in itemized deductions, can result in a portion of retirement funds being taxed even if given to charity. However, under the new Katrina Emergency Tax Relief Act, a gift to an eligible charity made from any amount withdrawn from a retirement account is fully deductible if done before the end of the year.
This tax break has been done in order to encourage the generous giving that has already been in abundance this year, allowing individuals to continue their contributions to their regular charities as well as provide relief for hurricane victims.
If you would like to make a charitable gift to Andrews, you can do so online at www.andrews.edu/development.
As always, please consult your tax advisor for more information.