Charitable Giving: Is it too late for 2014?
Is it too late to give?
As a general rule it is never too late to give to a charitable cause. But if you want to take advantage of year-end charitable giving through itemized tax deductions then the date of your gift is extremely important. Generally, charitable contributions are deductible in the year that you make the donation. For example, if the date of a donation is deemed to be on December 31, 2014 that donation is deductible on your 2014 income tax return. But if it is deemed to be made on January 1, 2015 you would need to wait until you file your 2015 taxes to claim the deduction.
Date of Gift: A charitable gift is considered made on the “date of delivery.” Establishing the date is important. It determines: (1) the tax year in which the gift is deductible; (2) the value of the gift for assets that fluctuate in value (for example, stock); and (3) in close cases, whether a gift is of long-term or short-term property. The date of delivery rules vary—depending on the type of property contributed and how it’s transmitted to the charity.
Type of Property:
Securities– For securities the delivery must be unconditional and the stock certificate must be properly endorsed. If it is hand delivered then the delivery date is the day the charity receives the securities. If it is mailed by the donor to the charity then the delivery date is the day the securities are mailed (the caveat is that this rule only applies to the U.S. Postal Service, not private mail couriers).
Gifts by Check– The same “mailbox rule” applies to the date of mailing a check to a charity if there is no restrictions on the manner of payment and the check is honored when presented (in other words, the check cannot be postdated). So, a donor will get a deduction on a 2014 income tax return for a check mailed on December 31, even though it is not received by the charity until January 2015. But it is important to remember that a donor who depends on a private postage service places herself at the mercy of the tax court)
Gifts of art and other tangible personal property– The delivery date for this type of charitable giving is the date the property is received by the charity and the title is transferred. If a gift’s physical size is too large to actually deliver to a charity or if the done doesn’t have the facilities to store the gift, simply transferring title may not be enough. The IRS may deny that the gift was actually made.
Real estate– The date the charity receives a properly executed deed is the delivery date. But, it is important that if the deed must be recorded properly to effectuate title under local law, the delivery date is the date of recording.
Credit Cards– If a donor makes a charitable contribution using a credit card it will become deductible to the donor when the bank pays the charity; it is not necessary to wait until the donor pays the credit card bill off. But the time that the bank actually pays the charity is usually uncertain, so do wait until the last minute to charge a gift.
With the end of the year approaching quickly now is the perfect time to address how to take advantage of charitable giving tax deductions. At Kira Doyle Law, we represent individual and business owners to assist in legal matters. Contact Kira Doyle Law to set up an appointment to discuss the tax consequences of your charitable donations.