Tax Planning: Giving It Away

BOSTON (CBS) - More to lower your tax bill:

You can only deduct contributions you give to qualified charities. Use the IRS Select Check tool to see if the group you give to is qualified. Remember that you can deduct donations you give to churches, synagogues, temples and government agencies. There is no deduction for any contributions made to a political campaign.
Cash is much appreciated as a donation but to get the deduction you need to document your contribution. The rules require either a bank record that supports the donation (a cancelled check) or a written statement from the charity that meets tax-law requirements. So, those loose dollars you put in the Salvation Army bucket or the church collection basket can't be counted as a deduction.

Make a charitable contribution now using your credit card and you will get the deduction for this year and you'll pay the bill next year! Use a credit card that pays you a rebate or gives frequent flyer miles or points and it is a win, win. You get the deduction and miles! Most charities are very happy to accept your credit card for donations especially those where individuals ask you to sponsor their walk or swim for charity.

You cannot take a deduction for the time you volunteer at the food bank or the hospital but you can get a deduction for the mileage driving to the food bank or hospital each week at 14 cents a mile. It's not very much but that's not the reason why I show up at the Food Bank each week.

Donate your old car to a charity. Your deduction will be limited to the amount the charity receives for the car when it's sold, not its book value. The charity must provide you with a written acknowledgement within 30 days of the sale of the car. Be sure the charity is legit by checking the IRS website. You can call the IRS at 877-829-5500 to find if the charity is listed as an IRS exempt charity.
An IRA owner, age 70½ or over, can directly transfer, tax-free, up to $100,000 per year to an eligible charity. This option can be used for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributed amounts may be excluded from the IRA owner's income – resulting in lower taxable income. However, if the IRA owner excludes the distribution from income, no deduction, such as a charitable contribution deduction onSchedule A, may be taken for the distributed amount.
Give appreciated assets to your favorite charity. The deduction will be the value the day you give it away and the charity can sell and they will have no tax consequences.

Additional IRS Resources: