How late can you make donations and still deduct them on your 2012 return?

To take a 2012 charitable donation deduction, the gift must be made by Dec. 31, 2012. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” But what does this mean? Is it the date you, for example, write a check or make an online gift via your credit card? Or is it the date the charity actually receives the funds — or perhaps the date of the charity’s acknowledgment of your gift?

The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

Check. The date you mail it.

Credit card. The date you make the charge.

Pay-by-phone account. The date the financial institution pays the amount.

Stock certificate. The date you mail the properly endorsed stock certificate to the charity.
 
Many additional rules apply to the charitable donation deduction, so please contact us if you have questions about the deductibility of a gift you’ve made or are considering making.

2 reasons to sell highly appreciated assets before year end

If you own highly appreciated assets you’ve held long term, it may make sense to recognize gains now rather than risk paying tax at a higher rate next year: 1. The 15% long-term capital gains rate is scheduled to return to 20%. 2. Higher-income taxpayers will be subject to a new 3.8% Medicare tax on some or all of their net investment income. As Congress and the President negotiate on how to address the fiscal cliff, it’s still unclear whether the 15% rate will be extended — especially for higher-income taxpayers. Because a final deal in Washington may not be reached until the very end of the year — or even after Jan. 1 — you can’t necessarily afford to take a wait-and-see attitude. And the new 3.8% Medicare tax will go into effect regardless of what happens with the fiscal cliff. If you have questions about the potential tax impact on your investments, then please contact us.

2012 Year-end Tax Planning

Even with so much uncertainty about the tax landscape for 2013, there are some basic guidelines that are good to review as we close out 2012.  The following publications are courtesy of BDO and will help with your tax planning for the end of this year and offer some ideas for next year.

For Individuals:
2012 Year-End Tax Planning for Individuals
2012 Year-End Tax Planning--Maximizing Itemized Deductions
Tax Incentives Scheduled to Expire at Year-End 2012

For Businesses:
2012 Year-End Tax Planning for Businesses 
2012 Year-End Tax Planning--Business Considerations

Self-employed? Set up a retirement plan by Dec. 31

If you’re self-employed, you may be able to set up a retirement plan that allows you to make much larger contributions than you could make as an employee. Plus, if you set up one of the following plans by Dec. 31, 2012, you can make deductible 2012 contributions until the 2013 due date of your tax return: 1. Profit-sharing plan. This allows discretionary contributions and flexibility in plan design. The 2012 contribution limit is $50,000 ($55,000 for taxpayers age 50 and older). 2. Defined benefit plan. This plan sets a future pension benefit and then actuarially calculates the contributions needed to attain that benefit. So you may be able to contribute more to a defined benefit plan than to a profit-sharing plan. The maximum future annual benefit toward which 2012 contributions can be made is generally $200,000. Various caveats and limits apply, so contact us for details while there’s still time to set up a plan for 2012.