Strategy: Contribute to charity directly from your IRA. Under the new law, qualified charitable distributions up to an annual $100,000 cap are exempt from tax. This tax break, dubbed the “charitable IRA rollover” is available only for the 2006 and 2007 tax years.
Best of all, the contribution can reduce or completely wipe out the tax on required minimum distributions (RMDs) from an IRA.
The whole story: Before the Pension Protection Act of 2006, affluent taxpayers were penalized if they used IRA funds to donate to charity. Reason: You’re generally required to pay tax on the IRA distributions you receive. But most tax deductions claimed on Schedule A— including deductions for charitable contributions — were partially phased out at higher income levels. So, you lost to U...(register to read more)