Wednesday, November 7, 2007

Moves your donors should make before tax season

Here's an interesting piece from a recent Dallas Morning News article... the kind of information that your donors will find helpful.

Moves to make before tax season | Dallas Morning News | News for Dallas, Texas | Personal Finance

Give to charity

The IRS is clamping down on what it sees as abuses in the realm of charitable contributions.

New for this year is a requirement that all monetary donations must be documented with a receipt, a bank record such as a canceled check, or written acknowledgement.

Also new this year is a requirement that donated clothing and household items be in good used condition or better to qualify for a deduction.

If you're planning to clean out your closet and donate old clothes to a charity, you may deduct only the fair market value for the donated goods. That's the amount that someone would pay for such items in a thrift shop.

You also can get a deduction for donating property such as stock, mutual funds, artwork and antiques.

As long as you've owned the property for more than a year, you can deduct the full fair market value of the gift, even if you paid less than that for the property, and avoid capital gains tax on the property's appreciation.

You also can time your contributions to accelerate or delay deductions.

"As long as you date and mail your check by Dec. 31, you can deduct your contribution for 2007, even if the charity doesn't receive it until January 2008," said Jim Smith, chairman of the Texas Society of Certified Public Accountants.

Charitable deductions made by a credit card are deductible if the charges are made this year, even if you don't pay the bill until 2008.

You must fill out the long tax form and itemize in order to deduct your charitable contributions.