So I told you I’d give you three easy ways in December to get your tax bill down now so that, come April, you can enjoy the spring and spend more money on baseball tickets and beers -- and not Uncle Sam.
Continue Reading Below
Last week, we talked about adjusting your W-4. This week you need to channel your inner philanthropist and get generous. Contributing to charity not only makes you feel good, but it is a great way to get your tax bill down, especially if you itemize your deductions.
And if you’re thinking you don’t really have an organization to donate to, think again. You can start with your local police, fire and ambulance departments.
But before you give away the farm because you’re feeling all Robin-Hoodlike, make sure the organization is legit. Go to Exempt Organizations Select
Check (http://www.irs.gov/Charities-&-Non-Profits/Exempt-OrganizationsSelect-Check) on the IRS.gov website, put in the name and make sure it’s on the list.
If it is, then hurry up -- write a check, charge it, give cash. Do something.
Continue Reading Below
Just make sure you do it by December 31.
And then keep a receipt or bank record of that contribution, regardless of the amount. The old rule that you only had to validate contributions of $250 or more is long gone. But if you’re feeling big-hearted and do contribute $250 or more, you will also need a letter from the organization to verify it.
Then don’t forget the miscellaneous stuff. For instance:
If you donate your time and drive to an organization or event, deduct 14 cents per mile.
If you made a casserole for the church picnic, deduct the cost of the ingredients. (What goes in a casserole anyway?)
If you have appreciated stock (that includes mutual funds) or property, you can give that away too. As long as you've owned the asset for more than one year, you get a double tax benefit from the donation: You can deduct the property’s market value on the date of the gift and you avoid paying capital gains tax on the built-up appreciation.
For noncash items, like clothing, electronics, or furniture, you need to determine how much it is worth when you donate it. That’s the amount you can deduct. Not your original cost. The Salvation Army has a great donation item guide (http://satruck.org/donation-value-guide) that can help you make a fair assessment.
And for noncash items over $5000, like a car or jewelry, you need a formal appraisal.
And remember for gift tax purposes, you can transfer up to $14,000 per person in 2014 without incurring any federal gift tax. Spouses together may gift up to $28,000 per recipient.
Check out the IRS Publication 526 Charitable Contributions for more grist.
E-mail Tracy your tax questions at firstname.lastname@example.org.