Roth IRA Tax Deductions

[Guest LyndaG]

Our tax preparer didn't know the answer to this one - I'm hoping someone here can help me. I know that I can deduct contributions to my children's education funds, but if I were to contribute money for them to go on a church-sponsored mission in the future, would this also be allowed as a deduction?

Any information would be much appreciated.

-- LyndaG

[John G]

If you are refering to the "education IRA" have mis-information. You may find the following from a Salasko article in the othira.com web site:

Contributions of up to $500 per beneficiary may be made to an Education IRA by married taxpayers with "modified" AGI below $150,000, and by single taxpayers with "modified" AGI below $95,000 [there is a phase out]..... An individual may be a beneficiary of multiple Education IRAs, and beneficiaries need not be dependents of or related to the contributors. The IRS is taking the position, however, that the total contribution per beneficiary per year cannot exceed $500. Contributions, which are not tax-deductible, are in addition to the $2,000 combined limit for traditional, nondeductible, and Roth IRAs. Contributions will qualify for the annual $10,000 per donee gift tax exclusion....

Note, NO deduction for the education IRA.

Concerning the church activity: donations to a church normally qualifies for a deduction if you itemize. However, ANY time you make a donation and then have a personal benefit you should not take a deduction. A similiar situation: giving a cash donation to your local high school which turns around and gives your kid a scholarship. You are not supposed to derive any direct benefit for a donation. I am not going to say that other folks may not try to claim a decution, but I would not.

If your tax preparer does not know the answer to these two questions, then you should find a better trained professional.

[Guest LyndaG]

John, Thank you for the information.

Seems I was misinformed about the education deduction. Perhaps you are right about seeking the help of another professional! Thank you for taking the time to reply.

LyndaG