Charitable Giving Approaches
Profit Ability Article Highlight

Aside from the obvious good you are doing by donating to charity, it is a nice side benefit to receive a tax deduction in the process. For most taxpayers, charitable giving activity simply entails writing checks to various organizations. While in and of itself that is a good thing, there certainly are ways to get more "bang for your charitable dollar." Read on for some different angles on charitable giving. If you have questions on this issue, please feel free to call Talley & Company at 714.937.6337.

Membership Dues: This is a simple one but nonetheless one that many taxpayers miss. You can deduct membership dues paid to a charitable organization that are above and beyond the value of goods, services and other items received in return. So if you receive a shirt, promotional product or other item of value, you can deduct your contribution above the value of that item.

Establish Your Own Charitable Foundation: For taxpayers with larger charitable contribution aspirations, setting up a charitable foundation might be a good option. You can donate cash, appreciated securities or other assets to the foundation tax-free. Thereafter, you can distribute the contributions in the manner you wish and on the timetable that fits your goals. Just be sure you take the necessary steps to ensure the your foundation is recognized by the IRS before proceeding. Also, be sure that at least 5% of the foundation's assets are dispersed each year. Side note: Paying yourself (or a member of your family) a reasonable salary for managing the foundation is allowable by law.

Donating securities rather than cash: This technique is an underutilized opportunity. Rather that just donating cash, you can get more bang for your buck by donating appreciated securities. You deduct the full market value of the stocks and your charity can sell them tax-free.

Charitable Remainder Trust (CRT): Consider establishing a CRT. To start, gift appreciated securities to your CRT. Under the terms you set up for the trust, you can pay yourself a fixed amount of income on a regular basis (called a Charitable Remainder Annuity Trust). If you prefer, you may structure the trust to yield a stream of income based on the trust's value. This is known as a Charitable Remainder Unitrust. After your passing, the trust will distribute the remaining funds to the organization of your choice tax-free. Also, without going into the details, we will tell you that the trust can lower your current tax burden by the amount you expect the trust to transfer to the organization of your choice. CRTs can be great tools to accomplish your charitable goals while retaining control of your assets.

Charge Your Contributions: If you don't have the cash to make a charitable contribution before year-end, fret not. By charging a charitable contribution to your credit card, you can deduct the full contribution amount in the tax year you made the charge, rather than the year you made the payment. This is a great way to accelerate a deduction into an earlier year, and works especially well if your bonus for this year has been deferred to January of next year. You not only benefit from deferred taxes on the bonus, but also lower your taxable income for the earlier year by claiming the deductible donation.

Deduct Costs Associated with Volunteer Work: There are many small costs associated with volunteer work that can be deducted. See the following list: 1-Mileage associated with charitable work (@ 14 cents per mile) 2-Tolls and parking fees 3-Any out of pocket costs 4-Supplies for events you host 5-Unremibursed travel expenses for certain charitable events. Side note: You cannot deduct the value of your time or the typical cost of the services provided.

Religious after-school program: Through afterschool programs, as long as they are not in the place of a standard education (public, private or religious based), it is possible to deduct religious training. To qualify, the only service that can be transferred must be an "intangible religious benefit." The benefit can not have any sort of "financial value in terms of reducing charitable donations." Side note: The IRS has yet to rule on this issue. Also, experts are split on how the final ruling will come down