It’s
that time of year when the we realize that we may have to pay a little more in
taxes than we would like so it is time to make some donations to our favorite
church or charity.
Although,
most charities would prefer if you gave year round so they could budget for the
entire year, they will be happy to tax your lovely gifts regardless of the size
and sometimes it doesn’t even have to be actual cash!
The
IRS has a few tips for us and here are the top three:
- Rules for Clothing and
Household Items: To be deductible, clothing and household items donated to charity
generally must be in good used condition or better. So, please don’t try to pass along your dirty
underwear or those “holey” socks and turn them into a “holy” donation. Unless of course you can provide a qualified
appraisal for such an item. Household
items include furniture, furnishings, electronics, appliance and linens.
Guidelines for Monetary
Donations: To deduct any charitable donations of money,
regardless of amount, a taxpayer must have a bank record or written
communication from the charity showing the name of the charity, the date and
amount of the contribution. Bank records
include canceled checks, bank or credit union statements, and credit card
statements. Donations can be made in
cash, check, electronic funds transfer or payroll deductions. The pay stub would be acceptable proof for
payroll deductions.- Special Charitable
Contributions for Certain IRA Owners: This provision is scheduled to expire at the end
of 2011, offers older owners of individual retirement accounts a different way
to give to charity. An IRA owner, age 70
½ or over, can directly transfer tax-free up to $100,000 per year to an eligible
charity. Distributions from
employer-sponsored retirement plans including SIMPLE IRAs and SEP plans are not
eligible. Check with your Liberty Tax
advisor to see if your charity and your plan are eligible!
As
a reminder, contributions are deductible in the year made even if paying on a
credit card. Also, it is important to
make sure that your charity is a qualified organization. However, feel free to contribute to my
retirement fund in if you don’t have a favorite charity!
We
wish you a very Happy New Year and hope that you stop by one of our offices
soon. We would love to help you
strategize your tax goals for this year and next!
David Rocci
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.