Can a church member who contributes a personal check to his church on Sunday, January 3, 2010, deduct the check on his 2009 tax return if the check is backdated to read “December 31, 2009?”
No, contributions are deductible in the year they’re made. The donation check must be delivered to the church in 2009 in order to be deductible in 2009.
However, donations charged to a credit card before the end of 2009, count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear shortly thereafter.
Only about 30% of taxpayers receive a tax benefit for their donations. That’s because only taxpayers who itemize their deductions on Form 1040, Schedule A, can claim a federal deduction for charitable contributions. This deduction is not available to the 70% of individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if they are among the 30% whose total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction.
To deduct any charitable donation of money (including cash), regardless of amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements.
These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more.
The Government Accounting Office (GAO) reported that individual taxpayers overstated their charitable deductions by $13.8 Billion for tax year 2001. By requiring the charity to issue written acknowledgement of the donation, abuses will be reduced substantially.
Special Charitable Contributions for Certain IRA Owners
This provision, currently scheduled to expire at the end of 2009, offers older owners of individual retirement accounts (IRAs) a different way to give to charity. An IRA owner, age 70½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option, created in 2006, is available for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.
To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. Amounts so transferred are not taxable and no deduction is available for the transfer.
Not all charities are eligible. For example, this special provision does not include contributions to donor-advised funds.
Amounts to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions.
Rules for Clothing and Household Items
To be deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances and linens.