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September 23, 2008

Senate Passes Bill to Extend Charity Tax Breaks

By a vote of 93 to 2, the Senate has passed legislation that would renew and extend several tax provisions affecting charitable giving.

One key provision would allow older donors to get a tax break when they give charities money from their individual retirement accounts.

The House of Representatives now will review the Senate legislation. In May, the House passed its own bill that would renew and extend tax provisions, including the one for IRAs. The Senate and House differ over how the legislation should be paid for and would have to agree before Congress could pass final legislation.

Until December 31 of last year, donors age 70 1/2 or older were able to transfer up to $100,000 to charity from their individual retirement accounts each year without paying income taxes on the money.

The Senate-passed legislation would renew the provision retroactive to January 1, 2008, and extend it to the end of 2009.

Additional provisions in the Senate legislation would renew and extend other breaks related to charitable giving, including special deductions that businesses may take for gifts of food and donations of books and computer to schools.

The legislation also has provisions that would create tax incentives for charitable giving to help victims of summer storms, tornadoes, and floods in the Midwest.

People who use their cars and other vehicles to provide disaster relief in the Midwest would be able to deduct 41 cents per mile — 70 percent of the current business mileage rate — through the end of 2008. The rates now are 14 cents per mile for charitable activities and 58.5 cents for business activities.

Volunteers in the Midwest could also exclude from their income reimbursements from charities for the use of their vehicles up to the amount of the standard business rate through the end of 2008.

— Grant Williams

Tuesday September 23, 2008 | Permalink

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