A Q&A to help you protect your year-end charitable deductions
Question #1: You use your credit card to donate to a qualified charity on December 31 this year. You don’t pay the credit card bill until January next year. For which year do you get to take the charitable contribution deduction on your federal (IRS) income taxes? Of course, you’ll only get an charitable donation deduction if you itemize deductions on your return.
Answer: Donations charged to a credit card before the end of the year count for that year. This is true even if the credit card bill isn’t paid until the next year. In other words, credit card contributions are deductible in the year the charge is entered into the system. The timing is easy to prove — you use the date on the credit card slip or receipt. Be sure the slip or receipt shows the December date (sometimes credit card charges don’t get processed right away, and your statement might show a January date for the charge).
Question #2: Instead of using a credit card, you use your bank debit card or PayPal account (that draws directly from your bank account) to make the December 31 donation. Your bank statement doesn’t show up until January. For which year do you get to take the contribution deduction? Of course, you’ll only get an charitable donation deduction if you itemize deductions on your return. More . . .