Charity deduction deadline approaching
Published 12:00 am Wednesday, December 30, 2009
Even though April 15 is still more than four months away, taxpayers can’t wait much longer if they want to make certain itemized deductions for their income tax returns.
Greg White, a certified public accountant, said it is important to note that charitable donations must be made before the end of this year, in order to qualify as a deduction in April.
“You’ll need some documentation of your gift,” he said. “Usually, a cancelled check is adequate for smaller donations of $250 or less. If it’s a larger contribution, it’s preferable to have written acknowledgement from the receiving organization or charity. You’ll need to ask them to provide you that written documentation.”
White also said taxpayers can make their January 2010 mortgage payment by Dec. 31, 2009, and they will then be able to get credit for that payment as a deduction. This is allowed because mortgage payments represent interest for the previous month (in this case, December 2009).
One other move taxpayers can make to lighten their April burden is to increase contributions to a traditional IRA. Contributions to a traditional IRA are tax-deferred and can be used as a deduction.
“You can make up to the maximum allowable contribution for the year, which depends on your IRA,” White said. “It’s not really tax free, you’ll pay taxes on that money when you draw it out years later. But usually, it’s at a lower tax rate because you’re not earning as much income at that time of your life.”
The IRS offers these tips to help taxpayers plan their donations at the end of the year:
Contributions are deductible in the year made. Therefore, donations charged to a credit card before the end of the year will count toward 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 during that year.
Be sure the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations.