The Olympics are over, kids are back in school, fall is nearly here, and the year is moving into its final quarter. Now is the time to fine-tune your 2008 tax strategies, including your plans for charitable giving. I firmly believe that taxes should never drive charitable decisions, but certainly the tax laws should be intelligently used to enhance your charitable plans. So, here's a checklist of things to keep in mind as the year winds down.

Charitable Mileage
If you use your auto for charitable purposes, such as driving a Boy Scout troop or attending meetings as an officer or in some other official capacity (not just going to church on Sunday)-then you can claim 14 cents per mile as a charitable deduction. This deduction pales in comparison with what you can claim for business auto use (58.5 cents per mile after 7/1/08), but at least it is something.

Out-Of-Pocket Expenses
If you incur out-of-pocket costs in rendering services to a charitable organization, you can claim a charitable deduction for those costs. Therefore, keep track of what you spend for office supplies, postage, long-distance phone calls, etc. However, one important thing you cannot deduct is the value of your time. While your time is no doubt valuable to you, it is not deductible. Similarly, a person who owns a property and let's a charity use it rent-free cannot claim a charitable deduction due to the fore-gone rent. Sorry, it just doesn't work that way.

Clothing and Household Items
Charitable gifts of clothes and household items such as furniture and appliances are only allowed if the items are in "good used condition or better." However, if you have items valued at more than $500 (per item) that are not in good used condition you can still claim a deduction if you obtain a qualified appraisal. Interesting-it sounds like an appraisal is worthwhile if you have really valuable junk!

Determining what value to claim for clothing and household items is always a challenge. Typically, your deduction will be the "fair market value" of the item-but how much is that? While you may have originally paid $100 for an article of clothing, what would someone else pay for that used item now? Check out the Web sites of organizations such as Goodwill (www.goodwill.org) or the Salvation Army (www.salvationarmyusa.org) for some guidance in what values might be appropriate to claim as a deduction.

Automobiles
Your deduction for donating a vehicle to a charity is limited to the amount the charity sells the vehicle for. If you think you can sell it yourself for a higher value, it would be better to do so, and then just donate the cash to the charity.

Gifts of Stock
If you own a stock or mutual fund that has increased in value, you are sitting on some untaxed capital gain. Rather than sell the investment and incur taxes, you can donate all or some shares of it to a charity. Since you did not sell it, you pay no taxes, but you can still claim a charitable deduction for the value of the gift. Of course, if you own a stock or mutual that is worth less than you paid for it, you are better off selling it and claiming a capital loss, and then donating the cash.

Cash Gifts
Even making a gift of cash requires some thinking. A gift of less than $250 requires substantiation by a bank record (canceled check, credit card record, etc.), while a gift of $250 or more requires an acknowledgement by the charity.


Gerald A. Townsend, CPA/PFS, CFP®, CFA® is president of Townsend Asset Managment Corp., a registered investment advisory firm. Email: Gerald@AssetMgr.com.

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