It's Not Too Late for Last-Minute Tax Breaks

The best New Year's resolution of all may involve some last-minute financial scrambling on the Internet before 2002 officially gets under way.

Donations to qualified non-profit groups--including schools, churches, and charities--can be a real benefit when it comes to figuring your personal income taxes, but you have to make those donations before January 1 in order to qualify for the deductions.

With time running out, there's still hope. Just log on.

All the big charities have made it easy for supporters to send in money through online contributions. They accept major credit cards like Visa, MasterCard, American Express, and Discover. It's almost as easy as clicking your mouse.

And you don't have to donate cash. The Red Cross will even take donations of stock via the Net.

Through the second week of November, the Red Cross received $543 million in U.S. donations, including $65 million in online gifts. The Red Cross has the biggest non-profit profile in the United States, but lots of smaller charity groups and local volunteer organizations also accept online donations.

Covering Expenses

Like any merchant that takes credit card payments, the Red Cross and other charities pay a processing fee to the credit card operators. Visa and MasterCard, through the banks and organizations that issue their cards, do give charities a break on fees. A small slice of your donation dollar will nevertheless be used to pay the payment processors.

To reduce the cost and increase the convenience of online giving, you may want to use a funds-routing service like PayPal. For the most part, PayPal deals with smaller payments and charges lower rates than its credit card counterparts. Similar online payment services are offered by EBay and Yahoo.

"If you give us your bank account number or credit card information, all you have to do is click a button and enter your password and, boom, you can give 50 bucks, just like that," explains Vincent Sollitto, vice president of corporate communications for PayPal. "That convenience and ease of use is a big reason we were able to raise $2.3 million for the Red Cross in just a few weeks."

Remember that you will incur interest charges on any donation made by credit card that isn't paid off before the monthly deadline. Donations made by debit card won't run the risk of racking up those interest charges.

You can always mail a check to your favorite charity, but just be sure that it's postmarked before midnight on December 31 or you'll have to wait a whole year before you can get credit for the donation on your taxes.

Other Ways to Give

Are you one of those people with a jarful of coins stashed away at home? A great way to contribute to a charity is to take your horde of nickels, dimes, and quarters to a grocery store that has a Coinstar machine. Coinstar, a publicly held company, has coin-counting equipment in more than 9300 locations in North America and Great Britain.

The company charges a fee (8.9 percent for U.S. coinage) to count your unsorted coins. Customers get a receipt that can be redeemed for cash at the checkout register. If you want to donate, you get a receipt that says your money is going to the selected charity. Non-profit organizations that benefit from participating in the Coinstar system include the Red Cross, U.S. Fund for UNICEF, and Leukemia & Lymphoma Society.

Coinstar estimates that if half the people living within two miles of its machines chipped in $1 apiece, they would raise $65 million in donations.

Network for Good is another good charitable giving portal. It was started by AOL, Cisco Systems, and Yahoo to promote donations to thousands of non-profit groups.

Network for Good promises that 100 percent of each gift goes directly to the charity of choice. The site also offers suggestions to ensure your contribution is going to a legitimate organization that will help people as you intend.

Keep Track

For any donation to count on your income tax forms, you must have a receipt, a cancelled check, or some other documented proof that you gave the charity something of value. Otherwise, the IRS isn't inclined to give you credit for your generosity.

Any bona fide charity and legitimate donation processor will acknowledge your online gift with an e-mail confirmation, which you can use as proof of your donation.

However, you're out of luck if you use the short tax form (EZ), because only those taxpayers who file using the longer Form 1040 qualify for itemized deductions.

If you do your taxes yourself and use tax preparation software like Intuit's TurboTax, the software will prompt you for charitable donation information. Otherwise, just include your documentation with the rest of the paperwork you give your CPA or tax preparer.

The Turbo Tax software and Intuit's Web site provide links to charity Web sites for easy last-minute contributions. Among their links is Charitygift, which handles online donations for a wide range of non-profit groups.