Three actions that may affect the 2017 tax return you will file in 2018.
Charitable contributions. Taxpayers can deduct contributions that they make to charitable organizations only in the year the donation is made. There is still time for taxpayers to contribute to a charity before the end of 2017. After several storms this year, many taxpayers are making donations to disaster relief organizations.
IRA distributions. Taxpayers over age 70 ½ should receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017. A special rule allows who reached 70 ½ in 2017 to wait until April 1, 2018 to receive their distributions.
IRA Contributions. Taxpayers generally must make workplace retirement account contributions by the end of the year. However, they can make 2017 IRA contributions until April 17, 2018.
Many of the rules for traditional IRAs also apply to your account in a:
- SIMPLE IRA plan, or
You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.
You may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code:
- A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes;
- A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;
- A church, synagogue, or other religious organization;
- A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;
- A nonprofit volunteer fire company;
- A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services);
- A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;
- A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.
Timing of Contributions
Contributions must actually be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method.
If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property. If the property has appreciated in value, however, some adjustments may have to be made.
Limitations on Deductions
In general, contributions to charitable organizations may be deducted up to 50 percent of adjusted gross income computed without regard to net operating loss carrybacks. Contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations are limited to 30 percent adjusted gross income
A special limitation applies to certain gifts of long-term capital gain property.
The organizations with foreign addresses are generally not foreign organizations but are domestically formed organizations carrying on activities in foreign countries. These organizations are treated the same as any other domestic organization with regard to deductibility limitations.
Except as indicated above, contributions to a foreign organization are not deductible.