How to Give at the Holidays With Tax Day in Mind

NEW YORK (MainStreet) — The Internal Revenue Service recently published Tax Tips for ‘The Season of Giving’ reviewing the rules for claiming a tax deduction for donating to church or charity.

Here are some of the tips, with highlights by me:

  • Contribute to qualified charities. 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. Ask the charity about its tax-exempt status. 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 for 2012, even if you pay the bill next year. A gift by check also counts for this year as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
  • Know what you can deduct. You can generally 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 all 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 may include a canceled 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.

Let me expand on these tips.