December 18, 2012
It’s year end already, and with it comes the race to get ready for tax season. Traditionally, December marks a time for giving generously to charities, family, and friends. It’s also a time that can have a major impact on your upcoming tax return. But fear not, we’ve compiled a few helpful “Season of Giving” tips for you (courtesy of the IRS), covering everything from charity donations to refund planning.
- Contribute to Qualified Charities—If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by December 31, 2012. Be sure to inquire with the charity regarding its tax-exempt status. Donations charged to a credit card by December 31 are deductible for 2012, even if you pay the bill in 2013. The same is true for donations by check if it is mailed in December.
- Understand What You Can Deduct—You can typically deduct 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, household items, cars, and boats.
- Keep Records of All Donations—Always maintain a record of donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction, which may include a cancelled check, bank or credit card statement, or payroll deduction record.
- Gather Records in a Safe Place—Be sure to file records so they do not get lost or damaged. And, as long as you’re gathering contribution documents, it’s a good time to also start gathering other source documents needed to file your tax return in 2013. These include receipts, canceled checks, and other records that support income or deductions you will claim on your tax return.
- Plan Ahead for Major Purchases—If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive. Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return; however, if your tax return requires additional review, it may take longer to receive your refund.
Be sure to contact one of our professionals with questions. Remember, we are here to help.
From our entire staff: Best wishes for a happy and safe holiday season!