The Tri-Valley area is known for its generosity to those in need and December is traditionally a month for giving generously to charities. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are 4 “Season of Giving” tips:
- Tip #1: 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 www.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 credit card statement in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
- Tip #2: 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.
- Tip #3: 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 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.
- Tip #4: Gather 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 in 2013. 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.
Linda Koziol, Enrolled Agent
Visit our Website: www.eastbaytaxpros.com for more tax news.
East Bay Tax Professionals is located at 6400 Village Parkway, Ste. 201, Dublin, California.
Circular 230 Disclosure: Any advice contained in this post (including any attachments unless expressly stated otherwise) is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.