Are you looking to reduce your 2016 tax liability in the waning days of the year? There’s still plenty of time to contribute to one or more of your favorite charities.
Generally, you can deduct the full amount of your donations on your 2016 return for checks mailed or credit card charges posted before Jan. 1, 2017 – even if you donate to a charity online as you’re getting ready to celebrate New Year’s Eve.
What’s more, there’s an added tax incentive to step up charitable gift-giving this year. If President-elect Donald Trump pushes through some of his proposed tax reforms for individuals, as expected, the extra write-off may be worth more to you in 2016 than it will be in 2017.
For starters, the current law allows you to deduct the full amount of your charitable contributions, up to the limit of 50 percent of your adjusted gross income (AGI). If you’re giving away property, like a piece of art or securities, the deduction is limited to 30 percent of your AGI. Any excess may be carried over for up to five years.
But be mindful of the strict recordkeeping rules prescribed by the IRS. For donations of $250 or more, you must obtain a written acknowledgment from the charity, including the amount of the donation, a description of any noncash property that was contributed, and the value of any goods or services provided. Obtain these acknowledgements as soon as possible so you won’t have to scramble come tax time.