Charitable tax planning
Friday, April 20, 2007
For most folks, tax season is over. There are some special situations where 1040s aren't due for a while longer (details in this earlier blog).
And around 10 million of us requested extensions to fill out the forms in a few months.
Of the 127 million or so folks who have filed, most prefer not to think of taxes again until next year, and probably not until next April.
But you can help make the 2008 tax season easier and less costly with a little tax planning right now.
One of the easiest tax moves to make is to give to a charity. If you itemize, it will help reduce your taxable income and that should lower your IRS bill.
A couple of groups are trying to get us to think about giving now, tying their pleas for financial (and tax-deductible) support to the 1040s we just finished filing.
Tax Fairness Pledge: Responsible Wealth, a project of United for a Fair Economy, is targeting wealthier filers whom it says have received disproportionate benefits from the tax cuts enacted over the last few years. The group is asking those taxpayers to donate their savings.
To help you determine the size of any tax windfall you've received, the group has created MyTaxCut, an online calculator that lets you calculate your share of the federal tax cuts for the 2006 tax year.
"We're hoping that wealthy people will be dismayed to realize just how much they receive every year from the tax cuts enacted in 1997, 2001 and 2003, especially in a time of huge deficits and harmful budget cuts," said Mike Lapham, director of the Responsible Wealth project at UFE.
The tax cuts cited by Lapham are the capital-gains tax cut of 1997 and the income, dividend and capital gains tax cuts enacted in 2001 and 2003. The 1997 change is permanent; the 2001 and 2003 tax cuts are due to expire in 2010.
"Last year the total in federal tax cuts for those with incomes above $200,000 per year was more than $81 billion," said Lapham. "That's more than twice what the 90 million taxpayers who made less than $50,000 received."
Responsible Wealth is encouraging people, once they figure their tax-cut savings, to donate that amount to tax-fairness groups such as itself.
Of course, you can give your money, ostensible tax windfall or not, to any group you choose. As long as the recipient is a qualified tax-exempt group in the eyes of the IRS, you can deduct the gift.
Just remember to follow the new financial donation rules that took effect Jan. 1 and get a receipt.
Refunds for Good: Another group, Refunds for Good, is encouraging taxpayers to donate their telephone excise tax refund amounts to three non-profits it has selected.
The organization even produced this video to get word out about its effort:
The groups recommended by Refunds for Good are:
- Solar Electric Light Fund (SELF)
- PeaceJam Foundation
- Physicians for Social Responsibility
Donations made via Refunds for Good's Web form will go directly to the selected group's bank account.
Again, if you like the idea of donating this one-time refund amount to a charity, you can select one of your own and send it a check for the $30-to-$60 phone credit you received.
And again, get that receipt since the IRS now requires confirmation of any monetary donation, regardless of how large or small.
Virginia Tech Memorials: If you're looking to offer some support of those affected by the tragedy at Virginia Tech, a couple of charitable funds have been established.
United Way of Montgomery, Radford & Floyd (UWMRF) has created the United in Caring Fund for Victims of the VA Tech Tragedy. Money collected will help pay for funeral expenses, transportation for family members and mental health services support. For more information on the fund, you can call UWMRF at (540) 381-2066 or e-mail [email protected]
Donations can be made at UWMRF's Web site or by mailing gifts to:
P.O. Box 6202
Christiansburg, VA 24068.
If you mail a contribution, clearly note on your check that you wish it to go specifically to the United in Caring Fund for Victims of the VA Tech Tragedy.
Virginia Tech University also has established the Hokie Spirit Memorial Fund. Funds will be used to cover expenses including but not limited to, grief counseling, memorials, communication expenses, comfort expenses and incidental needs.
You can give online; in the "Gift Information" section, choose "Hokie Spirit Memorial Fund" from the drop-down menu. The University asks for your patience, as the unusually large volume of traffic to its Web site is causing some temporary connection delays.
If you prefer to mail a check, make it out to Virginia Tech Foundation Inc. and send it to:
Hokie Spirit Memorial Fund
University Development (0336)
Blacksburg, VA 24061
Be sure to designate the gift for the Hokie Spirit Memorial Fund.
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Posted by: Josh Elliott | Wednesday, April 25, 2007 at 08:22 AM