TaxHawk® Tax Tips
- Seven Common Tax Mistakes
- Non-Taxable Income
- Tax Advice For Parents
- Charitable Donations
- Divorce Tax Advice
Charitable Donations1. Donate Stock instead of Cash
Donate stock instead of cash to your favorite charity. If you hold publicly traded stock that has gone up in value, you can get a charitable deduction for the full value of the stock and avoid paying any capital gain tax.
Here's an example of how it would work. You donate 100 shares of Company X that you purchased two years ago for a total of $3,000 but which had a value of $13,000 on the day the donation was made. By donating the stock directly to the charity, you get a deduction of $13,000 and you avoid paying tax on the $10,000 capital gain you would have recognized if you had sold the stock.
CAUTION: You must give the stock directly to the charity. Don't sell the stock and give the money to the charity. The opposite is true for donating stock that has lost value. Never donate stock that has lost value. Instead, sell the stock and donate the cash to the charity. You'll then get the benefit of the capital loss as well as the benefit of the charitable deduction.
2. Deduct Expenses for Volunteer Work
Deduct any expenses that you incur doing volunteer work for a qualified organization. You should obtain a written record from the charity confirming your volunteer work and whether or not you received any reimbursements for your expenses. The following are some common volunteer expenses:
- Automobile - you can deduct 14 cents per mile for any volunteer related commuting or travel.
- Travel expenses - If the trip is primarily related to volunteer work.
- Long distance phone calls.
- Uniforms and other specialty clothing.
3. Remember to Deduct Contributions Withheld from Wages
Remember to deduct charitable contributions which are withheld from your wages such as United Way contributions that you volunteered to have taken out of your paycheck.