With only a few days left in 2013 and plenty of planning to do for the upcoming tax year, make sure you've written and mailed your charity donations before Dec.31st rolls around. There is a limit to the amount you can deduct on your taxes, so there are a few things you should know as a giver:
- All checks to your favorite donations must be postmarked by Dec.31, 2013. If using a credit card to gift a charity, as long as the transaction takes place before Dec. 31st (even if the credit card bill is paid in 2014) you're ok.
- The charity you contribute to must be "IRS approved" as a 501(c)(3) organization. What does that mean? The government identifies these organizations as tax-exempt and approved for receiving your contribution. If you ask, any tax-exempt charity should provide you with proof of their status. Hang onto it for your records.
- In order to deduct for charitable contributions, you'll need to file a Schedule A tax form with the IRS and itemize your deductions.
- Deductions are limited to 50% of your adjusted gross income. So, if your adjusted gross income is $50,000 and you contribute $30,000 to a qualified charity, you'll only be able to claim up to $25,000 for this year. You will however be able to claim the other $5,000 during the 2015 tax year. Penrose & Associates will be able to tell you exactly how that's done. Just ask!