— Steven M. Piascik, CPA, MT
Between Holiday parties and other festivities, many of us are feeling generous this time of year. December is the busiest month for charitable giving, with December 31 being the last day that contributions made in 2014 can reduce your taxable income.
As you dig deep into your pockets one final time for tax solutions this year, here are a few smart tax-friendly charitable moves to consider. Any or all of these should help to reduce your 2014 tax burden when you go to file taxes next year.
It’s never too late to plan ahead. Charitable giving should be a life choice. Consider setting up a Family Foundation or a Charitable Trust, which will enable you to make very significant contributions throughout your lifetime including family recognition, while still giving you and your family some very significant tax breaks. Working with a team of advisors who are fluent in setting up trusts and estates, you can explore a myriad of tax-friendly options and charitable planning tools.
Good deeds are worth the travel. Your car mileage to and from your volunteer projects are tax-deductible, so keep track of this. However, your actual hours spent volunteering are not. Sorry.
Donate appreciated stock held for more than a year – and avoid capital gains. Many non-profit and charitable organizations, including schools, social service organizations and environmental groups, accept appreciated stock that can be sold and converted into cash in 2014.
Make sure it’s legit. To receive a tax write-off, you must contribute to a qualified tax-exempt organization, including charities with a 501(c)(3) status, as well as churches and religious organizations, foundations and more. The IRS provides an on-line search tool that allows users to search for and select an exempt organization and check certain information about its federal tax status and filings. See link: http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.
Document, Document, Document! You must keep records of your donations. This includes saving canceled checks, acknowledgment letters from the charity, and appraisals for donated property.
Your trash is someone else’s treasure. Organizations such as Goodwill, Salvation Army or other donation centers will gladly accept donations of used property, such as furniture, clothes and other office or household items.
You earned it; now give it away. If you receive a year-end bonus this month from your employer, consider giving it as a one-time gift to a charitable organization(s) of your choice.
Any or all of these steps will help to reduce your 2014 tax liability. And looking ahead, make plans now to explore with a trusted CPA the charitable tax structures that make the most sense for you, in 2015 and in the years to follow.