If you are [...]]]> The compromise tax package just passed by Congress brings back for 2010 and 2011 the ability to donate tax-free from an individual retirement account. And, reflecting the end-of-year nature of the Congressional action, the 2010 donation can be made as late as January 31, 2011. (See section 725 of H.R. 4853).

If you are 70½ or older you can donate from your IRA directly to the qualified organization of your choice – tax-free! The tax package rule applies to the 2010 and 2011 tax years, and allows you to give up to $100,000 each year. You could call this rule the “Grin and Give Rule.”

Normally, when you take money out of your IRA, that money is taxable income to you. That’s fine, you say, you’ll just turn around and spend the money on your mortgage or give it to a charity — and get an offsetting deduction. But you might not get all or part of that deduction if, for example, you use the standard deduction or you itemize and your deductions get caught up in the phase-out rules.

Under the Grin and Give Rule, the money taken from the IRA is not taxable income to you. And you don’t have to worry about whether you use the standard deduction, itemize or face other deduction limits. Actually, if you were going to make a charitable deduction anyway, using the Grin and Give Rule could help you protect your other itemized deductions, and even save taxes on your social security. And, of course, the charity doesn’t have to pay any tax either.

Cautions: Don’t give away money you may need. The gift must be made directly from your IRA trustee to the charity. Be sure to obtain a written receipt from the charity to substantiate your donation. The Rule applies to many charities, but not all. At this moment, this is a Federal income tax law; check whether the your state’s income tax laws have been conformed to include the extension. Consult your tax advisor.

While the report doesn’t mention it, I’m guessing they looked for cash donations. If a donor wrote a check to the police charity, the [...]]]> Tampa Bay police apprehended two bogus solicitors using the name of a recognized police charity. The couple had also been active in Orlando, and when apprehended were headed to Louisiana.

While the report doesn’t mention it, I’m guessing they looked for cash donations. If a donor wrote a check to the police charity, the scammers would have to alter the check to get anything for their efforts. If they did that, the donor likely would get their money back from the bank (for honoring a false instrument). But, if a donor gave cash — it’s gone. A good reminder about the perils of donating cash.

Read the Tampa Bay Online story.

Come January 1, this rule is gone.

Read the details.

Read The Chronicle of Philanthropy report.

If you become just 20% more effective in your investing, you’ll produce significant benefits for [...]]]> Chances are you’d like each dollar you donate to do the greatest good it can. You want to avoid weak and poorly run charities that waste money. You want to find strong, well-run and effective charities, and support them.

If you become just 20% more effective in your investing, you’ll produce significant benefits for your pocketbook. If you become just 20% more effective in your giving, you’ll produce significantly more good for the world. In both cases, the benefits are measurable in real dollars.

Take George, for example. He’s not a Rockefeller or a Gates, just an adult who is generous.

• George gives about $1,000 per year to charities, and plans to give $50,000 more when he dies.
• George is 50 years old, and based on his remaining life expectancy (from the Social Security Administration Office of the Actuary), has about 28 more years of annual giving.
• Than means George will give $78,000 to charities in the future ($28,000 before he dies, and $50,000 from his estate).
• If he’s just 20% more effective (smarter) as a giver, he’ll do almost $16,000 more good — that’s like adding 16 years of giving!

The sooner George starts being a smarter giver, the greater the long-term results he’ll produce.

It’s never been more important to give to charity.

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