Did you know that giving more than 8 percent of your earnings to charity – including your church -- can trigger an IRS audit?

We’re not suggesting that you withhold money from charities, and least of all from your church, but we do recommend that you be aware of IRS rules.

In recent years, the agency has increased its focus on taxpayers who claim big deductions for charitable contributions. To verify those gifts, the IRS is demanding that taxpayers retain canceled checks or check images.

My advice to taxpayers who contribute more than 8 percent to charity: When possible, make contributions by checks, and retain the cancelled checks or images for at least five years.

Also, consider creating a contribution record, which includes the dates, amounts and the names of the organizations that received your gifts. This, combined with bank statements, should quickly conclude an IRS inquiry with positive results for the taxpayer.

***
Taxpayers can deduct donations for Haiti earthquake relief on their 2009 returns instead of waiting until 2010, thanks to a bill approved last week by Congress.

The Haiti Assistance Income Tax Incentive Act passed the House and Senate by unanimous vote.

To claim Haitian relief on your 2009 return, however, you must make the contribution before March 1. Congress unanimously approved a similar tax deduction following the 2005 tsunami that that killed hundreds of thousands of people along the Indian Ocean.

Rashad Phillips is a Charlotte tax accountant. Visit his Web site at www.rashadphillips.com or Phillips Tax Tips on Facebook.

Sign up for our Weekly Email Newsletter Email: For Email Marketing you can trust

Other Ways to Share Twitter Del.icio.us MySpace

Discussions and Submission Agreement