If you’re in the giving mood this holiday season, there’s certainly no shortage of charities, non-profit groups and social services agencies that could use a helping hand.
Some of you may even be helping individuals and families – such as those impacted by Hurricane Sandy or the victims of the recent awful typhoon in the Philippines.
Whether you’re donating time or money, you should know that your charitable efforts could have a big impact on your tax return in 2013.
Luckily, the IRS has just come out with a few “Season of Giving” tips dealing everything from charity donations to refund planning:
Here they are:
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 Dec. 31. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Exempt Organizations Select Check tool 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.
Gather Records in a Safe Place
As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return in 2013.
This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file 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.