It’s better to give than to receive, and this is especially true when it comes to charitable giving—which benefits the giver and receiver, and the community, as well. Here, three legal experts share tips on how to make sure your money does the most good for you and your nonprofit of choice.
Doug Stanley, Bryan Cave St. Louis
ânº If you make a donation by credit card but do not pay the bill during the year you made the gift, you’ll still get the deduction in the year the donation is charged to your card.
ânº If you mail a check to your favorite charity as late as Dec. 31, you’ll still get a deduction in that year as long as the envelope is postmarked Dec. 31 and the charity cashes the check shortly thereafter.
ânº If you’re claiming a deduction for more than $500 for donated clothing or household items, you’ll need to present proof of value, in the form of an appraisal, with your return.
ânº As of last year, you need proof of your donation if you want to claim a deduction. Gifts of $250 or more require a receipt or written acknowledgement from the organization; donations under that amount require a canceled check, a credit card statement or a receipt.
ânº The best time to make a charitable donation from your IRA is at death, because you avoid both income and estate tax.
ânº Appreciated securities are a good gift to charity: You can deduct the full amount of the security. For example, if you buy stock for $100 and it’s worth $1,000 at the time of the gift, you can claim a $1,000 deduction.
ânº To prevent charitable bequests from being challenged by your heirs, have evidence in place that you were mentally competent when you signed your will or trust. Your attorney will ask you a series of questions to determine your competence.
Douglas Thornburg, Paule, Camazine & Blumenthal
ânº Make sure the charity you’re interested in is legitimate, so you don’t get taken in by a scam artist. Most legit charities are listed on irs.gov, with the exception of some religious organizations. Also check
charitynavigator.org, an independent organization that evaluates American charities.
ânº You can get a substantial savings on your estate taxes if you leave part of your estate to a charity. But if you’re charitably inclined, you’ll get more pleasure if you give while you’re alive—and you’ll be able to claim a tax deduction, too.
ânº There are a couple of ways to structure a large charitable gift, depending on the situation. A charitable lead trust gives a set amount of money every year for a set period of time, then whatever is left reverts to your estate or family. A charitable remainder trust gives income to a beneficiary or beneficiaries for a term of years or a lifetime, with the remainder going to charity upon your death. Structured correctly, it can result in a substantial tax deduction.
Leo MacDonald Jr., Carmody MacDonald
ânº Fund charitable bequests with money from qualified retirement plans. If you leave that money to your heirs, they’ll have to pay taxes on it. Nonprofits can enjoy it tax-free.
ânº You can deduct the mileage you use performing charitable activities (volunteering, delivering food and clothing to those in need, etc.). The reimbursement rate is typically 14 cents per mile.
ânº There are limits, based on a percentage of your adjusted gross income, to the amount of charitable deductions you can take each year. Check with your accountant.
ânº Want to leave a substantial amount to a nonprofit, but not sure which one? Give to the Greater St. Louis Community Foundation. When you decide where you want the money to go, they’ll take care of it and handle all the paperwork—but you’ll get your deduction when you make your gift to the foundation. It’s an inexpensive way of setting up your own charitable fund, without the hassle. LN