More than 40 percent of all gifts to charity are made in the month of December. A few well-recognized organizations -- Susan G. Komen for the Cure, Center for Individual Rights and the Nature Conservancy among them -- took in more than 99 percent of their 2011 online donations from December contributions, according to Charity Navigator, the largest online charity evaluator. If you plan to make charitable gifts this year, here are some tips published by the IRS in “Tax Tips for ‘The Season of Giving,’” along with a few tips from Bloomberg BNA, to help ensure that your generosity is rewarded at tax time:
• What’s the deadline? After the clock strikes midnight entering Jan. 1, any charitable contributions you make will be deductible for the 2013 tax year, not 2012. Donations charged to a credit card, or checks written and mailed by this date, are deductible for the 2012 tax year, even if the credit-card bill isn’t paid or the check isn’t cashed until 2013. If you’ve made a donation pledge in 2012, but don’t pay it until 2013, that gift may be deductible from 2013 taxes.
• What charities qualify? Random acts of kindness and support for good causes are wonderful. If you plan to take a charitable deduction for your contributions, however, they must go to an IRS “qualified charity.” You can determine whether an organization qualifies by reviewing its IRS Determination Letter. (Many organizations have this on their website.) You can also visit www.IRS.gov and use the Exempt Organizations Select Check tool to see if your favorite charity is listed. Even if not listed on the IRS website, most churches, synagogues, temples, mosques and government agencies are considered qualified charities; contributions made to them generally are tax-deductible.
• Who can deduct? Only taxpayers itemizing deductions on a Schedule A form may claim a deduction for charitable contributions. Thus, if a taxpayer’s itemized deductions (i.e., mortgage interest, state and local taxes and other deductible expenses) don’t exceed the standard deduction amount, it’s not advantageous for them to itemize deductions. The 2012 standard deduction amounts are $11,900 for a married couple filing jointly, $8,700 for a head of household and $5,950 for singles and for a married person filing separately.
• What can I deduct? You generally can deduct cash contributions and the fair market value of most property you donate to a qualified charity. Clothing and household items must be in new or used-but-good condition unless their value is more than $500 and they are accompanied by an appraisal. Motor vehicles, boats and airplanes are limited to whichever is greater, $500 or the gross proceeds from a sale. A statement from the charity acknowledging both the contribution and the amount received from the sale must be attached to the tax return.
• What records should I keep? You need to keep a record of any donation you deduct, regardless of the amount. You must have a written record of all cash donations to claim a deduction. This may include a canceled check, bank or credit-card statement or payroll-deduction record. Additionally, for cash donations of more than $250, you must have a written statement from the charity that shows its name, the contribution date and the amount.
(Tara C. Jackson is Federal Tax Law Editor at Bloomberg BNA.)
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