Holiday Giving Tax Tips from the IRS
December is a great month for giving generously to charities, friends, and family; but all that giving can have a major impact on your tax return.
Here are five “Season of Giving” tips from the IRS covering everything from charitable donations to refund planning:
- Make sure you contribute to qualified charities:
- Ask the charity about its tax-exempt status. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31.
- You can also visit IRS.gov and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity.
- Donations charged to a credit card by Dec. 31 are deductible, even if you pay the bill in the following. A gift by check also counts for the current year as long as you mail it in December.
- NOTE: Gifts given to individuals, whether to friends, family or strangers, are not deductible.
- What you can deduct:
- You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified charity.
- Special rules apply to several types of donated property, including clothing or household items, cars and boats.
- Keep records of your donations:
- You need to keep a record of any donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction.
- This can include a cancelled check, bank or credit card statement, or payroll deduction record. You can also ask the charity for a written statement that shows the charity’s name, contribution date, and amount.
- Store records in a safe place:
- As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return.
- This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file your tax return.
- Plan ahead for major purchases:
- If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive.
- Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return unless it requires additional review.
For more information about contributions, check out Publication 526, Charitable Contributions. The booklet is available on IRS.gov or order by mail via 800-TAX-FORM (800-829-3676).
If you have questions about charitable deductions please feel free to contact me.