Holiday Giving Tax Tips from the IRS

Posted in IRS Updates

Holiday charitable deductionsDecember 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.