As the end of the year approaches and we are in the holiday season, now is the time to think of charitable contributions if you are hoping to reduce your tax liability for 2012. (Of course we encourage charitable giving all year, but the end of the year is a popular time to take advantage of the tax deduction.) The IRS released these tips for charitable giving earlier this year. UPDATE: Here are the IRS Tax Tips for the 2012 "Season of Giving."
Key points to remember are:
- Contributions are deductible in the year made. Make that payment or donation by Dec 31.
- If you want the tax deduction, you must file Form 1040 and itemize your deductions.
- Contributions must be made to an organization qualified with the IRS. If you aren’t sure, search for charities online via the IRS website.
- Clothing and household items are deductible at their current fair market value, which is much less than the price you originally paid for it. Fair market value is the price at which someone would buy it in its current condition.
- Keep a record of the donation, such as a receipt, canceled check, or a written acknowledgement from the organization. Contributions of $250 or greater require more stringent records. For text-message donations, a telephone bill showing the name of the receiving organization, date, and amount will be sufficient.
- If you donated services to a qualified charity, you may deduct unreimbursed out-of-pocket expenses related to those services, such as mileage.
For more details, see IRS Publication 526 (this links to the 2011 version, the 2012 version has not been released).