There is still time in 1990 to select and carry out tax-saving strategies that must be taken by Dec. 31 if they are not to be lost forever.
CONTRIBUTIONS: Donations to churches and schools and other deductibles that you charge to your credit card by Dec. 31 are deductible this year. This holds true even if you don't pay your credit card bill until next year. But forget about any charitable deductions for pledges to churches, schools or other charities. You must mail payments by Dec. 31 to nail down deductions for this year.
Planning to donate appreciated stocks or other investments that you have owned for more than a year? Check beforehand to see if you are subject to the alternative minimum tax.
CAUTION: Never donate depreciated investments. Instead, sell the property, donate the sales proceeds to the charity and claim both the donation deduction and the capital loss.
TIP: When claiming charitable write-offs, remember to include out-of-pocket expenses incurred in performing volunteer work, including the cost of uniforms, telephone calls and transportation.
Tricky rules apply to blood donors. You can deduct the cost of round-trip travel, but not the value of the blood.
Sometimes, virtue remains its own reward. No charitable deduction, says the Tax Court, for the amount by which the cost of kosher food exceeds non-kosher food. Also deep-sixed was ** the deduction claimed by a gentleman who founded his own church, which used his contributions to pay his rent and electric bills. The "church" merely served his personal needs.
MEDICAL EXPENSES: Calculate whether payments for medical services will exceed 7 1/2 percent of adjusted gross income and, therefore, are deductible for 1990. If they are near the threshold, pay by Dec. 31 for discretionary expenses, such as buying eyeglasses. But if you know that you will be unable to overcome this year's 7 1/2 percent hurdle, try to postpone payment of any additional expenses until next year, when they might let you salvage something.
There is more to tax planning than timing payments. You also need to know what expenditures are allowable.
The list of eligible expenses includes many more items than just those obvious outlays to doctors and hospitals. For example, the IRS approves deductions for home nursing care received by you or your dependent, even though you hire someone who is not a registered nurse, and health-insurance fees charged by your child's school.
RENTAL PROPERTY LOSSES: Generally, losses from tax shelter deals can offset only income from similar investments. No longer can shelter losses shield from taxation non-shelter income such as wages.
These tough restrictions are subject to several exceptions, including a special break for most owners of rental property who qualify as "active" managers -- legalese for helping to make decisions on such things as approving tenants, setting rents and approving capital improvements. They can deduct up to $25,000 in losses against other income. That break, though, begins to phase out when adjusted gross income exceeds $100,000, and vanishes when income surpasses $150,000.
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