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!
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.