charitable donations, the IRS wants documentation

 When they passed the collection plate in church, you should've put in a check. Ditto for those bell-ringers outside the grocery store, sidewalk Santas and the kid who came to your door raising money for a school band trip. If you just gave cash - and didn't get a detailed written receipt - you are out of luck trying to deduct those contributions on your 2007 taxes. Tighter record-keeping requirements for smaller cash contributions went into effect last year, completing major changes in charitable contribution deduction rules that began with the 2006 tax year.

 Cash donations must be backed up by "proper" records, such as a check, bank copy of the check, electronic funds transfer record, credit card or credit union statement, payroll stub or W-2 in the case of a payroll deduction. These must show the name of the charity, donation amount and the date paid or transaction posting date. A written acknowledgment from the charity showing that information also will suffice.

 Previously, for amounts less than $250, a taxpayer's notes or personal check register reflecting the donations was sufficient. Now, those smaller contributions must be documented with authoritative records. People who were throwing cash into the collection plate at churches, unless they get a receipt, they're not going to be able to take a deduction. Instead of throwing in $10 cash, throw in a $10 check. Check to see whether a church or charity offers automatic electronic funds transfer or credit and debit card payments as a way of satisfying the documentation requirement.

 You don't have to provide your check or other documentation to the Internal Revenue Service - just keep it on hand in case you're audited. And if the charity didn't cash your check until 2008, you can include it as a 2007 contribution if you mailed it in 2007.

 Here are other rules for charitable contributions:

-      Household goods and clothing donated to charity must be in "good used     condition or better" to be deductible. An exception: Taxpayers can claim   a deduction of more than $500 for any single item, regardless of condition, as long as a qualified appraisal is included with the tax return.

    File Form 8283, "Noncash Charitable Contributions." 

-  A property donation of more than $500 requires Form 8283. 

-  Taxpayers donating an item valued at more than $5,000 must have an                 appraiser sign Part III of Section B of Form 8283. 

-      For all other household goods, the IRS says you should "get from the     charity, if possible, a receipt that includes a description of the donated     property." You can claim the item's fair market value, typically less than     its purchase price.

 -       If you donated a vehicle valued at more than $500, your tax deduction is    generally limited to the sum the charity receives when it resells the  vehicle - even if the fair market value is higher. But you can deduct the fair market value if the charity checks Box 5a, 5b or 5c on Form 1098-C indicating that it plans to use or improve the vehicle or give it to a needy person.

 -      For vehicles used in volunteer work, you can deduct either actual  operating costs such as gas or oil, or claim a flat mileage rate of 14 cents per mile for the time you were engaged in the volunteer work.

 -      Be sure to subtract from the charitable contribution amount any benefit     you get in return. An example:

        You pay $40 to attend a special showing of a movie to benefit a charity. If the regular price of the movie is $8, your deductible contribution is $32.

 - Taxpayers who made a direct transfer of funds from an IRA to a      qualifying charity, so as to exclude the IRA distribution from taxable     income, can't claim it as a charitable deduction.

 -      Be aware that many organizations don't qualify for the charitable     contribution deduction. Among them:

       political campaigns, political action committees, lobbying organizations, civic leagues, labor unions, chambers of commerce, sports clubs, homeowners' associations, groups operated for profit, social clubs or foreign governments. (You may be able to deduct  some contributions, like union dues, elsewhere on the tax return.)

 Check IRS Publication 78 to see if the organization is listed as a qualifying charity. There's an online "Search for Charities" tool on the IRS Web site at irs.gov. Also, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they may not be listed in Publication 78.

 EXTENSIONS

Automatic six-month extension to Oct. 15 as long as Form 4868 is filed by the April deadline. But any tax owed must be paid by April 15.

FREE E-FILING 

The IRS' Free File Alliance with tax software companies allows taxpayers with incomes of $54,000 or less to prepare and file returns online for free if they access the tax prep program through the IRS Web site. 

REFUNDS

 The IRS will split a taxpayer's refund into three different financial accounts, such as checking, savings and retirement accounts. File electronically to get your refund within days if you have your money deposited directly into an account.

Paper tax returns and refund checks can take up to eight weeks.

 To check refund status, go to the IRS Web site and click on "Where's My Refund?" on the left. When prompted, enter your Social Security number, filing status and exact amount of the refund shown on your 2007 return. Or, call 800-829-4477 . This is also the phone number for recorded information on various tax topics.

 2007 CHANGES IN IRS RULES

 - Deduction for mortgage insurance premiums on home acquisition    debt that was new or refinanced in 2007. Only taxpayers with adjusted gross   incomes of $100,000 or less take the full deduction, which phases out as income increases.

 - Homeowners granted forgiveness of mortgage debt in 2007 don't   have to pay taxes on the amount of that forgiveness, up to $2 million ($1 million  for a married person filing a separate return).

 -Stricter record-keeping rules for charitable cash donations. All must be backed up by official records such as a check, bank copy of the check, electronic funds transfer record, credit card or credit union statement. A charity's written acknowledgment also is OK.

 -2007 is the last year to claim the credit for certain energy-efficient   home improvements, as long as you didn't use it up for 2006.

 -The motor vehicle fuel credit can still be taken for 2007 purchases of   certain hybrid and alternative fuel vehicles. But the credit is phasing out or disappearing for many such vehicles as manufacturers reach 60,000 vehicles sold. Check the IRS Web site at irs.gov for a list of vehicles and credit amounts.

New for 2007 income taxes

2007 Personal exemptions

For yourself, spouse, qualified dependents

2006: $3,300  

2007: $3,400 Phaseout* loss for higher income taxpayers can be no more than two-thirds of the exemption

Standard deduction (no itemized deductions) 

Single or married filing separately

2006: $5,150

2007: $5,350

Married filing jointly

2006: $10,300

2007: $10,700

Head of household

2006: $7,550

2007: $7,850

 Adjusted gross income (AGI) limits for contributions to traditional IRA

 Married filing separately

2006: $10,000

2007: No change

 Married filing jointly

2006: $75,000-$85,000

2007: $83,000 - $103,000

 Head of household, single

2006: $50,000 - $60,000

2007: $52,000 - $62,000

 Standard mileage rates

 Business use

2006: 44.5 cents per mile

2007: 48.5 cents per mile

 Medical reasons

2006: 18 cents per mile

2007: 20 cents per mile

Earned income tax credit (EIC)

Two or more children

2006: $4,536

Adjusted gross income limits

2007: $4,716/$39,783

One child

2006: $2,747

Adjusted gross income limits

2007: $2,853/$35,241

No Children

2006: $412

Adjusted gross income limits

2007: $428/$14,590

Maximum investment income for qualifying for EIC

2006: $2,800

Adjusted gross income limits

2007: $2,900

AGI limits for Hope and Lifetime Learning (higher education) credits

2006: Up to $55,000 (single) $110,000 (joint)

2007: Up to $57,000 (single) $114,000 (joint)

Hope: Up to $1,650 per student

Lifetime Learning: Up to $2,000 per return

Adoption tax credit

2006: $10,960

2007: $11,390