Know the law — and your limits
Several Web sites give good overviews of tax deductions for charitable contributions. Among them:
- The Association of Fundraising Professionals: This organization represents
nearly 28,000 members in 180 chapters around the world working to advance philanthropy through advocacy, research, education and certification programs. Visit .
- BBB Wise Giving Alliance: For the basics of how to turn charitable contributions into tax breaks, visit www.give.org/tips/tax.asp.
- H&R Block: For brief points to consider when giving to charity for tax purposes, .
- Network for Good: For a wide range of topics related to charitable giving, .
- The American Bar Association: For tax rules and contribution limits
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Find a charity you can trust
To evaluate the effectiveness of a charity, few sites are of more help than .
Giving to colleagues, employees
Most employees expect a bottle of wine or a fruitcake from their co-workers during the holidays. How about a stuffed rattlesnake? In a survey of 250 advertising and marketing executives, The Creative Group asked what was the most unusual office gift.
Responses ranged from sea monkeys to frozen potatoes to a life jacket. The most disturbing? One co-worker gave a likeness of his own head mounted like a deer.
In general, it s best not to go too far out on a limb and instead give gifts that are thoughtful and can be enjoyed by the recipient, said David Wilmer, executive director at The Creative Group. Wilmer offers the following tips:
- Size matters: Don t give extravagant or pricey gifts. Stick with homemade cookies or small tokens of appreciation.
- Think practical: Gifts that can save your colleagues time during the frantic holiday season like gift-wrapping kits are always a plus.
- Remember the details: Dress up your gift with elegant wrapping and a bow and don t forget to include a handwritten note.
- Timing: If you get too busy during the holiday season to buy office gifts, give out presents for the new year like a 2007 calendar or a journal.
Holiday Tipping
Last year, Consumer reports found that 42 percent of those polled didn t give gifts to service providers, such as housekeepers and dog walkers, because they didn t know how much to give.
Smart Money magazine polled etiquette experts for the final word on whom to tip this year and how much:
- Salon workers and hair specialists Post suggests that you leave $10 to $60 for each worker who helped you, giving the biggest tips to those who delivered the best service. Barbers and hairstylists should be tipped the cost of one haircut. If you re regularly a good tipper, a small gift, such as gourmet goodies, will suffice.
- Workers in your neighborhood Consider giving gift cards of $15 to $25 to garbage collectors and mail carriers, says Leah Ingram, author of The Everything Etiquette Book. Note that U.S. Postal Service workers may accept only non-cash items valued up to $20 but gift cards are allowed). Appropriate tipping for newspaper carriers ranges between $10 to $30, Ingram said.
Rethink giving cash
In any given year, it makes sense for charitably-minded investors to donate long-held appreciated securities rather than simply giving cash.
If you sold appreciated stock in order to make a cash donation to a charity, you would probably have to pay capital gains taxes on the sale. That would consume a portion of the cash gift you intended to make.
But if you donated appreciated stock directly to the charity, neither you nor the charity would be on the hook for capital gains taxes. Moreover, you are allowed to deduct the full value of the donated security — not just the after-tax amount up to 30 percent of your adjusted gross income.
This year, the IRS has added a new wrinkle. If you re 70 ½ or older and have an IRA, and you already planned on making charitable gifts this year, it makes sense to look at your IRA, said Holly Isdale, head of the wealth advisory group at Lehman Brothers.
That s because of the recently passed Pension Protection Act of 2006. Under it, people who are at least 70 1/2 can now make direct gifts of up to $100,000 a year to a public charity from their Individual Retirement Accounts. Even better, these gifts can be counted toward your required minimum distributions from your IRAs.
If you make the contribution from your IRA, you won t be able to claim the deduction on your tax return. But the direct distribution from the IRA will not count toward your adjusted gross income.
There is a big catch, however: This provision is good only for 2006 and 2007. So if you want to take advantage of it this year, you need to act quickly.
