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Leslie Daff, JD, MBA - Orange County Estate Planning Lawyer

Friday, December 30, 2011

Tax & Estate Planning Tip #3: Still Time to Give

Probably the most effective last-minute tax-saving strategy is a charitable donation.  Considering federal and state income tax rates, you can reduce your tax by as much as 44% of your contribution ($44 on a $100 gift). 

There are many ways to give and many personal and community causes to support, including schools, churches, and charities.   

  • To receive tax benefits for charitable donations on your personal tax return, you need to itemize deductions. 
  • If you are a volunteer, you cannot deduct the value of your time but you can deduct your out-of-pocket expenses.  For instance, a volunteer can deduct mileage at 14 cents per mile, Little League coaches can deduct equipment purchases, and in a recent case, a humane society volunteer was able to deduct the cost of food, litter, and veterinary costs for cats she temporarily brought into her home.       
  • Donating appreciated property (property that has increased in value since you purchased it) is more beneficial than donating cash.  Your deduction is based on the fair market value of the property you donate and you avoid recognizing the gain by donating the property instead of selling it.
  • Avoid donating investment property that has gone down in value since you purchased it.  Sell the property, claim the capital loss, and donate the cash from the sale instead.   
  • Donations of household items are hard to value.  Make a list, take a picture, and use an online calculator to determine the amount you can deduct.
  • Want to help locally?  Review the list of charities at the Laguna Beach Community Foundation website ( or set up a donor-advised fund to obtain your charitable deduction now and decide on your charities later.   
  • For 2011, IRA owners who have reached age 70½ can contribute up to $100,000 of otherwise taxable payouts directly to charity instead.
  • If you charge a donation on your credit card, the contribution occurs when you charge it, not when you pay the bill.

Finally, remember you cannot take a deduction on your return unless you have an acknowledgement proving you made the donation.  For donations of property worth more than $5,000, you may need an appraisal.  Happy Giving and Happy New Year!

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