‘Tis the Season of Giving – tax tips for year end giving and receiving


The Season of Giving

               Tax Tips for Charitable Giving

Tax Deductible Contributions

  • Contribute to Qualified Charities.  In 2011, the IRS increased their efforts to bring non-profits into compliance for reporting. Those organizations who had not filed a Form 990 in three years lost their tax-exempt status. 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. If you aren’t sure, you can visit http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check 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 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.
  • 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.
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.
Gifts to Individuals – nondeductible, but free from gift tax!
  • Cash gifts to individuals (child or friend) can be given without tax consequences, up to $13,000 per donee, in 2012.
  • A gift of any amount can be given for the payment of tuition to a qualifying educational institution on behalf of an enrolled student. As long as the payment is made directly to the institution, it is excluded from the gift tax.
  • A gift of any amount can be given for the payment of medical expenses for an individual as well. The payment must be made directly to the medical provider, in order to be excluded from the gift tax.
  • Remember all gifts must by made by Dec. 31, 2012.
Gifts to You 
      A cash gift or gift of property to you from your church (employer) is considered taxable compensation, and must be reported to you on the appropriate W-2 or 1099.