Nine Tips For Tax-Smart Charitable Giving

Kelly Phillips Erb recently published a new article Nine Tips for Tax-Smart Charitable Giving on Frobes.com on December 2, 2010.

Making a gift does more than put many in the holiday spirit: Making a donation to a qualified charitable organization allows taxpayers who itemize to reduce their taxable income for federal income tax purposes.

1. Get good documentation.

Cash, or cash equivalents like checks and credit cards, are the easiest kind of gifts to make, but they can also be the easiest to forget about.

2. Know the value of your stuff.
The rule is that you can generally take a deduction for the fair market value of non-cash items such as used clothing or furniture equal to the amount that the item would sell for in its current condition.

3. Give appreciated assets.

Making gifts of property that has appreciated in value, like stocks, can give taxpayers a double benefit.

4. Your time is priceless.

Not only is your time priceless, it's also worthless for purposes of charitable deductions.

5. Beware of quid pro quo.

Charitable donations are supposed to be about the giving and not so much about the getting.

6. Timing is everything.

Your donation is deductible in the year you make the charitable gift.

7. Names matter.

Charitable donations are only deductible for federal income tax purposes if they're made to qualified charitable organizations. 

8. The sky's not always the limit.

For the majority of taxpayers, limits on charitable deductions won't affect your bottom line.

9. Read the fine print.

Tax rules are always changing and it's important to keep up in order to take maximum advantage of special tax breaks--or limitations--that might affect you.

Click here to read the entire article.

Posted by Yi Song, Associate Editor, Wealth Strategies Journal.