Year End Charitable Giving – 3 things to Remember
As the Holiday season reaches full swing and the Tax Year draws to a close, thoughts often turn to more cheerful thoughts than taxes. But now is the time to make last minute adjustments to your tax strategy and holiday charitable giving is something to consider. Here are three things to remember if you’re considering end-of-year charitable gifts.
- Charitable donations from your IRA. This special provision of the tax code is scheduled to expire at the end of 2013. It allows IRA owners who are age 70 ½ or over to directly transfer tax-free up to $100,000 per year to an eligible charity. To qualify, the funds must be transferred directly by the IRA trustee to the eligible charity. The amount counts towards determining if you’ve taken the required distribution amount but it will also serve to reduce your taxable amount, if any.
- Contributing Clothing and Household Items. To be deductible, items should at least be in good used condition unless you have an actual appraisal and include it with your return if the value is over $500. You’ll need a written acknowledgment from the charity that received the donation if the value is $250 or more and it should include a description of the items contributed.
- Contributing Cash. A charitable donation of cash can also serve to reduce your taxable income if you’re itemizing your deductions. You’ll need some written documentation (a bank record or communication from the charity will suffice) that shows the date and amount of the contribution. And if the amount is $250 or more, you’ll need an acknowledgment from the charity that it received the funds.
Gifts given after December 31 won’t count in this tax year. So if you have questions about charitable giving, now is the time to contact your tax professional to get them answered. Enjoy the season and some of your holiday cheer may just help you reduce your taxes as well.
By: Evan A. Nielsen (Licensed in California)
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