Charitable donations that pay

Charitable donations that pay

The real tax season is now, not next year, said Linda Stern in The Boston Globe. By planning your spending for the rest of the year with tax consequences in mind, you can significantly influence your final tax tab. Charitable deductions are one way to trim tax bills. But “this year, for the first time,” you’ll need to prove every good deed with bank records or receipts. “If you are giving away a car, try to give it to a charity that will use it as a car, instead of one that will sell it. Your donation is likely to be worth more.” If you donate art or another item of value, have it appraised before you give it away.

Also consider donating stocks and mutual-fund shares that have risen sharply since you bought them, said Tom Herman in The Wall Street Journal. “You typically get a deduction for the fair-market value of your gift and avoid having to pay capital gains tax on the increased value of the shares over the years.” Gift of stocks you’ve held

for at least a year will be the most valuable to charities. For securities with shorter-term gains, “your deduction typically would be limited to your cost basis.” Also, don’t give away losers. Instead, sell the stocks and deduct the losses, or use them to offset your gains dollar for dollar. You’ll get a bigger tax break.

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Real estate assets can also be donated to qualified charities, said Vivian Marino in The New York Times. Just about any type of holding, from townhouses to timeshares, can be donated. There are many ways to structure such a gift, but the simplest is to “transfer title to a charity and take the full appraised value of the property as a tax deduction, eliminating brokerage fees and, of course, capital gains taxes.” Another option might be to create an annuity combined with a charitable remainder. This provides the dual benefit of a charitable deduction as well as a stream of income. But structuring such a donation is no simple task. “Get advice from people well versed in philanthropy law.”

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