Charitable Giving Can Turn Out to Be Taxing

The U.S. government committed $350 million to help the victims of the Dec. 26, 2004, tsunami in the Indian Ocean, and it's bending over backwards to encourage procrastinators to make contributions of their own.

The good news is that as long as you donate cash to a qualified tsunami relief fund by Jan. 31, you can deduct that donation on your 2004 tax return.

See, it does pay to be charitable. Though if you're thinking of donating that jalopy in your driveway, be sure you're following the rules, or you'll just end up with more headaches than your old car gives you.

And keep in mind, if you don't itemize your deductions on your tax return, you don't get a thing for your goodwill. So pat yourself on the back and move on.

Tsunami Relief

To take advantage of the unusual deadline extension, make sure your check is dated on or before Jan. 31, 2005. If you're mailing it, be sure the envelope is postmarked by that date as well. And if you use your charge card, be sure the transaction goes through before midnight on Jan. 31.

Of course, you don't have to take that deduction on your 2004 return. It's just an option. You just can't take it twice. So take the time to figure out whether your 2004 or 2005 tax return would benefit most from your contribution.

Your donation is deductible only if you give to a qualified tsunami fund. Check out the USAID site and the USA Freedom Corps site for a list of acceptable organizations. And remember, some associations, such as churches or governments, are probably qualified even though they are not listed on either of these sites.

Big note: Donations to most foreign charities are not tax-deductible. "That's mainly because we can't police the charity," says Bill Fleming, director of personal financial services at PricewaterhouseCoopers in Hartford, Conn. So stick to American relief funds.

Car Donations

There is so much noise coming out of the IRS office about car donations that you've got to wonder if one of the rulemakers at the tax agency ever got stuck with a lemon.

Either way, it's a sore spot.