It’s that time of year again! Many of you are going shopping, decorating your homes, or preparing for holiday festivities. But don’t forget that December 31 brings the end of the tax year, and therefore you must carefully consider any income tax deductions that you plan to claim for the 2017 year. Just a small amount of planning can save you a lot of trouble when it’s time to file your tax return in April, so keep these guidelines in mind.
Make your contributions by the end of the year. As we said, only charitable contributions made during the calendar year can be counted toward your 2017 tax return.
Keep proof of your donations. If you’re audited, you will lose this deduction if you haven’t kept proof of charitable donations. Your debit or credit card statement will suffice, if you made donations that way. If you donate cash or household goods to a charity, be sure to ask for a receipt and keep it in a secure place.
Back up your proof. Don’t just rely on paper copies of receipts. Snap a photo of receipts with your camera or smart phone, and store a digital copy as well.
Deduct the correct amount. If you donate household goods, you can only deduct their fair market value (not the original purchase price). If you receive something in return for your contribution, then you must deduct the value of that item from the contribution amount.
Make sure your charitable organizations are qualified. Only donations to organizations that are qualified under section 170(c) of the IRS code can be counted as a deduction on your tax return. Many fake charities tend to pop up around this time of year, so do your research. You can check on a particular charity’s tax-exempt status by using this search feature on the IRS website.
Work with a skilled tax professional. Deductions can be tricky business, and even come back to haunt you in the event of an audit. Working with a skilled tax professional can help you navigate complicated rules and claim deductions correctly.