Be Charitable, Save Money on Your Taxes

First comes Christmas, then New Year’s, and before you know it, April 15th. Even though there are less than 9 days before 2010, there are a few philanthropic and tax-saving gifts you can make before then to lower your tax bill (and perhaps increase your return!).

More important than taking the charitable deductions is doing it right. Trust us, you don’t ever want love letters from the Internal Revenue Service (IRS).  Some general advice from the IRS:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.
• Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
• You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
• If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
• Clothing and household items donated must generally be in good used condition or better to be deductible.
• Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
• To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ).
• If the amount of your deduction for all non-cash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

Still not sure?  The IRS has a web-based mini-course that gives you information on charitable contributions and if you can deduct it.

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