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Mind
the Time to Claim Deductions For Your Charitable Donations
By
Chintamani Abhyankar
You can deduct donations made to qualified
charitable organizations only in the year you actually make them. Usually,
you make a donation at the time of its unconditional delivery according to
IRS.
- Donations by checks - If your mail a check to a charitable
organization, the date when you mail the check is considered to be the
date of donation.
- Donations by credit cards - The date on which the contributions are
charged to your credit card account is the date of donation.
- Donations by using Pay by phone account - If you use A Pay by phone
account to make donations, the date on which the financial institution
pays the amount is the date of your donation. You should use the
statement sent by the financial institution as the proof of donation.
- Stock certificate - If you donate stock certificates, the
transaction is supposed to be completed on the date of mailing properly
endorsed stock certificate. However if you hand over a stock certificate
to your agent or to the issuing corporation for transfer to the name of
the charity, the donation is not completed until the transfer is
completed. In this case, and the date of transfer will be considered as
the date of your donation.
- Promissory note - If your issue and deliver a promissory note to a
charitable organization, this is not a donation until the actual payment
is made.
- Option - If you allow an option to a charitable organization to buy
real property at a bargain price, you cannot claim a deduction until the
organization exercises such option.
- Borrowed funds - If you make a donation with borrowed money, you can
claim a deduction in the year you make the donation, irrespective of
when you repay the loan.
- Conditional gift - If you make a conditional gift depending upon a
future act or event that may or may not take place, you cannot claim
such a deduction.
Example -You make a cash donation to a school, to build a school. The
school accepts the donation on the condition that if it fails to collect
enough money to build the gym, it would return your money. In this
situation there is a chance of refund and you cannot claim deduction of
your gift as it charitable contribution.
If there is only a negligible chance that the act or the event will not
take place, you can claim that deduction.
Example - If you donate land to act for making a public park, and the
city does plan to use the land for a park, then there is very negligible
chance of the land being used for any other purpose. So you can claim your
deduction for such a donation.
Remember, if you claim the charitable contribution deduction in the
wrong year, IRS will not only disallow it but can levy severe penalties on
under-payment of tax. So you need to be careful about the year in which
you should claim a donation.
There are all sorts of financial decisions you take in your life. You
make gifts to your children; you make investments and acquire real estate.
Do you really know the tax implications of these decisions, which can save
you thousands of dollars?
Stop donating
your money to IRS is an e-book on these little known tax secrets. It
is written by Chintamani Abhyankar, a tax professional for last 25 years.
Get the expert advice.
Article Source:
http://EzineArticles.com/?expert=Chintamani_Abhyankar
http://EzineArticles.com/?Mind-the-Time-to-Claim-Deductions-For-Your-Charitable-Donations&id=1980221
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