The Katrina Emergency Tax Relief Act of 2005 (KETRA) provides a window of opportunity for individuals wishing to make additional gifts this year that would normally cause taxpayers to encounter the three percent charitable deduction limitations. In KETRA, Congress temporarily suspended limitations on deductions for cash gifts made to qualified charities during the period beginning on Aug. 28, 2005 and ending on Dec. 31, 2005.
In addition, KETRA states that assets held in tax-favored retirement accounts, such as IRA accounts, may be used to make additional gifts before Dec. 31 without being subjected to the 10 percent penalty tax for early withdrawal. You are encouraged to visit with your tax preparer to see how KETRA’s tax law changes apply to you.
(This article is not intended to provide the reader with either legal or tax advice. For legal advice, consult with your attorney; for tax advice, please consult with your tax preparer.)