Ten Tips for Deducting Charitable Contributions   When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A. Here are a few tips to ensure your contributions pay off on your tax return: 1. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates. 2. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance. 3. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received. 4. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles. 5. Clothing and household items donated must generally be in good used condition or better to be deductible. 6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. 7. To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document from the organization may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. 8.If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return. 9. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser. 10. Contributions made for relief efforts in a Midwest disaster area receive special benefits.   New Law Extends Net Operating Loss Carryback for Small Businesses; IRS To Ensure Refunds Paid Timely   IR-2009-26, March 16, 2009 WASHINGTON — The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years. To accommodate the change in tax law, the IRS today updated the instructions for two key forms — Forms 1045 and 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds. The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years.  Some taxpayers must make the election to use this special carryback by April 17, 2009. With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period. Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns. The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.    Expanded Tax Break Available for 2009 First-Time Homebuyers

IR-2009-14, Feb. 25, 2009 WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately. “For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.” The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit. This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers. For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase. The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.   Recovery Rebate Credit The recovery rebate credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year (2007 tax year) and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion. Generally, a credit adds to the amount of your tax refund or lowers the amount of taxes owed. Therefore, the amount you receive for the recovery rebate credit will be included as part of your refund, as shown on your tax return. You May Be Eligible People who fall into the categories described below may be eligible for the recovery rebate credit this year: Individuals who did not receive an economic stimulus payment. Those who received less than the maximum economic stimulus payment in 2008 $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low. Families who gained an additional qualifying child in 2008. Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008. Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008.

How does the Pension Protection Act of 2006 affect your Charitable Contributions?

While the focus of this bill signed recently by President Bush is designed to ensure that pension plans are adequately funded, the law also affects your charitable contributions.

Do you normally donate to your church or other charity in cash? Give clothing to Goodwill?

The new law will require some documentation of your donations made by cash or check such as a bank record or a written communication from the charity — including the name of the charity, the amount given, and the date of the donation. Otherwise, your charitable donation will be disallowed. The best advice here is to make donations by check or credit card and save the canceled check or credit card statement.

Do you have some old clothes that you won’t wear anymore? Want to get a deduction by donating to Goodwill? You might not be able to deduct this donation. The new law allows only the value of clothing and household items in “good condition” deductible as a charitable gift. What is ”good condition“ you may wonder. That assessment is left up to the Internal Revenue Service. You may have to end up taking pictures of the clothing and household items before dropping them off at Goodwill in order to substantiate ”good condition“ and qualify for the deduction.

You will not need to mail in the documentation with your return, but you will need to keep the documentation of charitable gifts with the copy of your tax return in the event of an IRS audit.

If you’ve already given monetary gifts or clothing or household items before the Act was signed, don’t worry that you lose those deductions for tax year 2006. Since the provision of the Act does not take effect until 2007, you won’t have to reconstruct your records for this year.

In any case, you still must itemize your deductions to be eligible for including charitable gifts as a deduction. Taxpayers filing a standard deduction will not be affected by the passage of this Act.