Don't Mess With Taxes

Sports and charities

Sports and charitable causes have long been linked.

Most professional athletes have charitable foundations. They tend to be associated with causes in which the athletes have a personal interest and/or which benefit children.

From a business perspective, affiliation with a popular cause can add a "real person" view of a well-paid professional athlete. And, of course, careful structuring of a charitable foundation can provide the millionaire athlete with some nice tax breaks.

For more than a decade, the Dallas Cowboys NFL team has supported the various programs of the Salvation Army. NASCAR's Kyle Petty and his wife Pattie created the Victory Junction camp, in honor of their late son Adam, for kids with life-threatening and chronic illnesses. 

But today I learned of a particularly interesting sports-charity deal.

Goal!!!!! The hubby is a soccer fan. This afternoon, Barcelona beat Manchester United for the Union of European Football Associations, or UEFA, championship. Basically, it's soccer's Super Bowl.

Since the hubby was taking off a couple of hours to watch the game, I decided to join him. Who would have thought it would lead to a tax blog post. OK, maybe I thought it could. But I digress.

In the rest of the world, sports franchises have no problem wearing jerseys emblazoned with a sponsor's name rather than the team's nickname. In today's championship match, the white sweaters of Man U bore AIG (yes, that AIG), while Barcelona's jerseys promoted UNICEF.

Yes. that UNICEF, the United Nation's program created to advocate for children's rights worldwide.

Barcelona teammates, UNICEF advocates and futbol champions
Lionel Messi (10) and Thierry Henry (14) carry the UEFA Cup across the field after today's victory. (Photo courtesy UEFA.com)

Wow, how could a global charity get away with asking for donations while spending the big bucks it takes to sponsor a sports franchise?

They don't, the hubby informed me. "Barcelona's so rich," he said, "they just decided to do it for free."

I repeat, Wow.

And, as the hubby frequently points out to me, he was right.

Unique arrangement: Back in the fall of 2006, Futbol Club Barcelona and UNICEF forged a partnership. During the announcement ceremony, the sporting club unveiled its new jersey featuring the UNICEF logo on the front. It was the first time in the club’s century-plus history that a logo had been featured.

In addition to the UNICEF-branded jersey, Futbol Club Barcelona also agreed to donate at least €1.5 million per year to UNICEF over the next five years to support UNICEF's international programs

The club's philanthropic efforts also include its foundation, Fundació Futbol Club Barcelona, which is committed to social, cultural, educational and humanitarian activities in Catalonia.

Congratulations to Barcelona on its win today. And congratulations to UNICEF for having its cause broadcast to a gigantic global audience.

If you want to give to a nonprofit championed by an athlete or sports team, be sure to check it out thoroughly just as you would any other nonprofit group.

Unfortunately, foundations created by athletes can run into the same management and compliance problems that bedevil other nonprofits.

But if your favorite player's cause checks out, go ahead and be a part of his or her team by making a donation. It could help cut your own tax bill, too.

Are garage sale proceeds taxable?

Our suburban neighborhood held our annual garage sale event this weekend. Rather than have 100 yard sales scattered across 100 Saturdays and Sundays, everyone puts out their junk on the same day.

The hubby and I actually find it pretty annoying. We don't participate, either as sellers or buyers, although I have been tempted to wander down the block and see what items my neighbors are trying to unload.

But the big issue for us is that we get up much later than our neighbors, on both weekends and week days. We're used to our commuting neighbors' cars cranking up too early Monday through Friday, but once they're out of the driveways, we can go back to dozing.

With the garage sale, however, it's a steady stream of vehicular noise starting at 8 a.m. on Saturday. I don't know how some of these folks' cars pass their safety and emission inspections, given how their vehicles obviously don't have mufflers.

But I digress. And at least, as I mentioned, it's just one weekend a year. And it's over. So now we've got 51 other less noisy weekends ahead of us.

Annual garage sale tax query: Along with the community garage sale each year,  I also get the same tax question. Do I have to pay taxes on the money I made from unloading all my unwanted stuff?

Sellers, you are in tax luck.

Although the IRS has a reputation for trying to get a piece of just about every cent we bring in, when it comes to the occasional garage or yard sale, you generally do not have to report the sales amounts as income.

The reason? In such sales, you're generally selling household items you purchased over the years and used personally. More to the tax point, you're selling them for less than you paid for them. 

In discussing sale of personal items in Publication 525, the IRS says, "if you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain."

The key phrase here is "capital gain," and that's underscored by the example the IRS offers:

You sold a painting on an online auction website for $100. You bought the painting for $20 at a garage sale years ago. Report your $80 gain as a capital gain on Schedule D (Form 1040).

But most items sold at garage sales and the like don't bring in more than what you paid for them. In fact, in most cases your total take for all yard sale offerings will be far less than what you originally paid

Some folks also point out that when you bought the items, you probably paid sales tax on them so taxing any money you make off them would be double taxation. But that's not really a concern of the IRS, since the sales taxes are state levies.

Is it a business? However, if you make a living via garage sales and, more often nowadays, buying items and then reselling them on eBay or another online auction site, be careful.

You've entered business territory and you could be liable for income and self-employment taxes on your sale proceeds.

But for the once or twice a year attempt to turn your trash into another person's treasure, no worries. Just do your night-owl neighbors a favor and don't welcome bargain shoppers until 10ish or so.

The Tax Guru, CPA Kerry M. Kerstetter, has more on taxes and garage sales in his post eBay Auctions and Garage Sales.

Consider charity instead: As yesterday's garage sales wound down, I noticed a Salvation Army truck on our block.

Either some neighbors called the charity to pick up items that didn't sell, or the truck was simply cruising the community looking for people who didn't want to schlep unwanted stuff back inside their houses.

Either way, donations are a good way to dispose of property you no longer need or want. And if you itemize, you can deduct the fair market value of the goods.

I've blogged about charitable giving many (many, many) times, so I won't repeat all those considerations here. Rather, you can check out my year-end tips on charitable giving, which apply year-round, too!

Earth Day tax breaks

Happy Earth Day!

To encourage us to be more environmentally friendly not just on April 22, but on every other day of the year, Uncle Sam offers several tax breaks.

Home
As noted in my earlier post on Missouri's energy-efficient appliances sales tax holiday, you can claim a tax credit on the federal level for certain home improvements.

The American Recovery and Reinvestment Act (AKA the Obama stimulus) which became law on Feb. 17 offers taxpayers a credit of up to $1,500 for some energy-efficient home improvements.

Under the federal credit, which can be claimed on 2009 returns filed next year, eligible improvements include such residential upgrades as air conditioners, furnaces, storm windows and doors, insulation and even window film, as long as the products meet Energy Star standards.

The table on page four of this story, 7 housing laws you don't want to miss, offers an overview of some of the new federal home energy tax credit. Additional info, and a longer table, can be found at EnergyStar.gov.

Auto
Gasoline prices are still relatively low, but I suspect they'll creep up as the summer vacation driving season nears. That might get some folks thinking about buying a new energy efficient auto.

Some hybrids still offer decent tax credits. The tax break for Ford hybrids has begun phasing out, but if you're a dedicated GM fan and believe the automaker will survive, the full credits are still available for its eligible hybrid vehicles.

The IRS has put together a table listing 2009 model year hybrids and their credit amounts. You can find prior model years and credits at this IRS page.

Charity
Contributions to charitable organizations generally are deductible as long as you itemize. Give to an IRS-qualified group that supports environmental causes and you get the two-fer of supporting a good eco-cause and reducing your tax bill on next year's return.

Locally, I'm a fan of the Lady Bird Johnson Wildflower Center. But there are lots of worthwhile environmental causes out there. Check out IRS Publication 78 to find one that meets the tax agency's standards and your philanthropic inclinations.

Some final tax-filing tips and warnings

This last weekend before the tax filing deadline doesn't have to be your return's Lost Weekend..

OK, maybe that 1945 Ray Milland classic film isn't the best metaphor. Then again, after dealing with taxes as the deadline bears down, you might want a drink or two. But I digress

The fact is there is still time to get your 1040 done and into the IRS by Wednesday. Just knuckle down and do it. That's my plan as soon as I get this posted.

I've got everything sorted. My biggest challenge is going through all my self-employment expenses. I try to keep good track, but every year I find notes in my business travel file folder that say "mileage to/from" various locations I've gone to for business meetings, seminars, conferences, etc.

Yes, I know I should be more precise. But in most cases, the amount is a repeat. For example, my freelance group meets once a month at the same place. I just need to find that January 2008 notation with the exact mileage and replicate it for each of the notes I dropped in the file for the subsequent meetings.

Of course, I've also backed up my attendance by noting the meetings in my calendar, as well as with the notes I took at each gathering, just in case the IRS ever asks.

Audit areas: And the tax man might one day ask. Not because I'm such a scofflaw, but because I am self-employed.

We small business folks are attractive audit targets because the IRS depends primarily on just us to accurately report our income and deductions. Aside from 1099-MISC forms indicating payment, and not every client provides those, there's not a lot of third-party verification for the IRS to double check.

In Navigating a Tax Return Minefield, New York Times reporter Tara Siegel Bernard examines areas where filers tend to fudge. Following are her categories and my thoughts on them.

Charity:  Cash donations (this includes actual currency and also contributions by check or charge card) require a receipt or bank record.

Valuing donated goods, which now are supposed to be in good or better condition, is a bit dicier for the IRS to determine.

Get details on donation tax considerations in this post.

Capital gains: The amount you got when you sold is recorded and reported to IRS by your broker or the fund or stock manager, but you get to come up with the basis amount. For tax purposes, that's the figure that counts.

Your sale amount minus your basis equals your profit. A larger basis means less profit and that means a smaller tax bill.

Right now the IRS counts solely on your veracity in calculating your basis, but that will change somewhat next year. Starting in 2011, a new law will require brokers to report investor basis on investments bought after 2010,

Home office: This deduction is not as big an audit red flag as it used to be. However, since more entrepreneurs (including many who were forced into opening their own businesses because of layoffs) are working from home, there are more chances for the IRS to make sure this deduction is correct.

And that also means there are more taxpayers who will mess this up, either intentionally or by legitimate mistake.

At a meeting of freelancers last week (that repetitive mileage reporting event I mentioned earlier), several folks were surprised to learn that a home office doesn't have to be a separate room. Just a portion of a room can count as long as that space is used regularly and exclusively for business. More on the finer points of the home office deduction in this blog post and story.

Quasi-personal expenses: One of the things I advised the freelancers against last week was mixing (or mixing up) business and personal expenses. As the Times' story notes, this gets complicated when you take a spouse on a business trip with you.

Even locally, if you use your personal credit card to pay for a business expense, you've created a tax problem. Sure you can notate the receipt, just as you would if you'd used your business-only piece of plastic, but you're on much more solid tax ground by having separate business bank and charge accounts and using them for their designated purposes.

Cleaning quibble: At the end of the Times' story, a tax pro talks about how people tend to think they can deduct a lot more than they really can. "And no, you can't write off your dry cleaning," he says.

But in some cases, you can deduct your dry cleaning.

Of course, there are limits which tend to make this tax break effectively useless for many folks, but ...

Say you have a job that requires you to wear a special uniform. (Sorry, active duty servicemen and women, this doesn't apply to you.) Dry cleaning costs for your uniforms (or protective clothing your job requires) can be counted as unreimbursed business expenses.

The keys here are that the clothing is a job requirement and it's not suitable for everyday wear.

This eHow article provides a step-by-step guide to deducting work-related dry cleaning.

Of course, that deduction is part of the miscellaneous itemized group on Schedule A. That means the costs must come to more that 2 percent of your adjusted gross income before you can claim them. It's going to take a lot of dirty clothes for most people to get over that deduction hurdle, but technically dry cleaning costs can be deductible.

A few more people might be able to claim dry cleaning as a charitable deduction.

As a high schooler, I was a Candy Striper at our local hospital; the older women who volunteered were Pink Ladies. We bought our own colorful uniforms and were responsible for their upkeep.

When you volunteer for an IRS-qualified organization that requires you to purchase a uniform, you can deduct both the purchase price and any upkeep costs.

As with work apparel, the nonprofit must require that you wear the uniform while performing your volunteer services.

And again, the uniform must be something that's not suitable for everyday use. I know that today a lot of things get worn "out of context," but you and the IRS know what is meant here.

If I'd been filing taxes back then and itemizing, I could have counted my red-and-white jumper cost and upkeep as a charitable deduction.

This deduction is a bit easier to claim, since in most cases there are no income thresholds or percentages to worry about.

Some last-minute filing guidance: If you can count some of your dry cleaning on your 2008 tax return, good for you. For some other possible deductions and more helpful last-minute tax hints, check out:

• 10 overlooked tax breaks

• Oft-forgotten deductions, credits and rules

• Meeting your tax-filing deadlines (an excerpt from my book, The Truth About Paying Fewer Taxes)

• 10 common tax-filing mistakes you can avoid

• Tempting the tax auditor

• Tax savings with self-employment retirement accounts

And don't forget, if you just can't complete all the paperwork by Wednesday, get an extension. Just send in Form 4868, either via snail mail postmarked by midnight April 15 or electronically by 11:59 p.m. on Wednesday.

That will give you six more months to get your Form 1040 and all associated schedules and other forms filled out and to the IRS.

Remember, though, you still have to send in any tax you owe (or a good approximation thereof) with your extension request or the IRS will start tacking on interest and penalty charges.

Tax breaks for organ donations

A New York man lost his bid for a $1.5 million divorce settlement. He said his ex-wife should pay him that amount in consideration of the kidney he donated to her.

The court ruled, however, that the kidney was a gift. And you thought your spouse came up with some off-the-wall presents!

Plus, said the judge, human organs may not be considered marital property.

At least the life-saving medical move was made years ago. The romantic in me would have been so bummed if they had broken up right after the surgery, making it look like the kidney was the reason for the vows.

Other organ options: It doesn't do the Long Island ex-husband much good, but organ donations can produce tax benefits in Utah.

A Utah resident who donates an organ may claim a tax credit for up to $10,000 of qualified expenses incurred for the procedure. To qualify, the taxpayer must donate bone marrow or "any part of an intestine, kidney, liver, lung or pancreas for transplantation in another individual."

The credit is nonrefundable, meaning that if it's greater than the Utah taxpayer's bill, the excess credit can't be counted. However, all is not lost. Any overage can be carried forward and used to reduce the filer's state tax bill for up to five years.

Check-off donations: The Beehive State also has a less dramatic tax code connection with organ donations. Utah taxpayers can make contributions directly on their state returns to several nonprofit groups. Among the eligible organizations is the Kurt Oscarson Children's Organ Transplant Fund.

Utah is not alone in allowing these types of contributions. Most states offer at least a few such donation options, which will decrease your refund or increase the amount of state tax you owe.

Most of the time, you make the choice directly on your personal income tax form. In some cases, however, you must file a separate form.That's the case in Maine.

That state's Schedule CP, featured in the image to the left, offers its residents the option to give to seven nonprofit groups, as well as three political parties.

The Federation of Tax Administrators maintains a list of tax return check-off programs. Check it out to see what donation options your state allows at tax filing time.

If you do take advantage of this method of giving to an IRS-qualfied nonprofit, make an extra copy of your return showing your gift. Then be sure to count it as a charitable donation when you itemize your federal return the next year.

MLK Day 2009 and volunteerism's payoff

Each year, many Americans spend the Martin Luther King holiday as a day of service with nonprofit groups.

This year, the MLK volunteer effort got an added boost from President-elect Barack Obama, who reiterated that call to service.

Obama, like countless others, is following up his words with action. Today, Obama, Vice-President Joe Biden and their families are doing their parts by volunteering at various project in Washington, D.C.

Tax credit for good works. Now I realize that tax considerations don't matter to most folks who volunteer for their favorite cause. Tax benefits are secondary (or lower on the list) to your commitment, be it financial or through actual efforts.

But since the tax-saving opportunities do exist, neither should you waste them.

As noted in this AustinWoman story,  spending time helping out your favorite charity certainly is good for the soul. And with just a little more effort, it could also benefit your bottom line at tax time.

True, giving of your time gets shorter shrift than other charitable contributions. The write-offs are usually smaller and they require a bit more attention to detail.

But if you're diligent, you still can get a bit of relief on your 1040. And at tax time, every little bit helps.

Time spent doesn't count on your taxes: Let's start with the bad news. You can't deduct the value of your time or services.

If you make $50 an hour and take an hour off work to help out at a nonprofit, that's not a $50 tax deduction. It's just you doing something nice.

Similarly, you can't do a project for a group, such as create a brochure or set up a website, and deduct the cost of what you would have charged a paying client.

But you can deduct unreimbursed expenses that are incidental to your volunteer work. Say you spend the day with an organization helping it send out a fund-raising letter. If you bought postage stamps, stationery and other office supplies to help get the letter to potential donors, you can deduct those out-of-pocket costs as a charitable gift.

Remember, though, if you're a marketing specialist and helped the group come up with a more polished plea, the time you spent crafting the message is not deductible.

Some travel, other costs do count: And you do get some tax breaks in getting to the group.

Travel costs going from your home to the nonprofit site are deductible. This includes use of your car, as well as public transportation and taxi fares. So are the costs of using your car to help do your favorite charity's work, such as delivering meals to shut-ins.

For folks who've deducted business travel on their taxes, the methodology is the same. You can deduct actual automotive costs related to doing your volunteer work or you can compute your charitable driving expenses using a fixed mileage rate.

This amount, though, is only 14 cents per mile. It's set by statute, rather than adjusted annually for inflation. In extreme instances, Congress does make exceptions. for example, folks who used their vehicles in connection with Hurricane Katrina relief efforts a couple of years ago got to claim special, higher mileage rates.

But such instances are the exception and the increased mileage write-offs are temporary.

So if you do find that a few more deductions will help cut your tax bill and you can claim some of these volunteer-related tax breaks, be sure to claim them.

The words behind the holiday: The historic nature of tomorrow's Inauguration of Obama is underscored by the MLK holiday falling just a day before the first African-American is sworn into the highest office in the land. 

The work of Dr. King and others paved the road to the White House.

You can listen to King's most famous speech, "I have a Dream," here.

Tax moves you must make today

Are you ready to party!? I don't want to get in the way of your New Year's Eve preparations, but I do want to mention a few literally last-minute tax moves that could be a real cause for celebration.

Since time is fast running out, I'll be quick.

Charitable giving
You've got to make charitable gifts today if you want to claim them on your 2008 return. This means getting any clothing or household appliances to your favorite charity's drop-off location before it closes this afternoon. 

You have a bit more leeway with monetary contributions. Most nonprofits take credit cards, so call this morning and charge your 2008 donation. As for gifts by check, Joe Kristan, who writes Tax Update items for Roth & Company, PC, has the scoop on getting your contribution in the mail.

Investment moves
Did your portfolio suffer some losses? Whose didn't? If you haven't already sold those stinky stocks, call your broker now! If you do have any gains, you can use those losses to offset them. If everything is on the loss side of the ledger, you still can use up to $3,000 in losses to help reduce your ordinary income.

Home tax breaks
Don't forget the tax breaks offered by your home. Make your Jan. 1 mortgage payment today so that the interest amount can be deducted on your 2008 Schedule A. The same early-payment strategy applies to deductible real estate taxes.

State and local sales taxes
Congress finally got around in late October to renewing the sales tax deduction. Most folks will use the tables provided by the IRS instead of tallying the state and local levies on hundreds of register receipts. But one large sales tax amount is worth noting: the amount charged on an auto purchase. You can add that sales tax amount to the table's number. I'm not saying you need to rush out and buy a vehicle today, but I am just saying if you're close to making such a purchase, it might be worth it to close the deal today.

Automotive tax benefits
And if that new auto is a hybrid, you could get a tax twofer. The tax credit for hybrids is still in effect. The only problem is that the amounts for the most popular hybrids are long gone or fading fast. Toyota's hybrids no longer carry any added tax benefits. Tax credits for Honda hybrids disappear on Jan. 1, 2009. So if you want a hybrid Accord or Civic, get to your Honda dealer today.

Higher education
Going to college or got kids in school? Then William Perez, who pens About: Tax Planning: U.S., says you should consider paying some of those upcoming higher education costs today. Check out his advice on prepaying college costs.

OK, enough tax talk. I'll let you get to these final tax tasks so you'll still have plenty of time to get ready for your New Year's Eve festivities.

Have a fantastic time tonight and be sure to raise a glass of bubbly to salute not only the arrival of 2009, but also all the tax-smart year-end moves you've made.

Keep the giving going

Another Christmas has come and gone and, as always, it was a fine one. Every year the hubby comes through on special (and other) occasions.

As for me, sure, there were a few things I wanted to get but didn't get around to picking up. No problem. My unpurchased gifts can wait until January. That's the month the hubby and I were married, so I can always call them anniversary presents and still get "good wife" credit! That's our secret, OK?

After the holiday hubbub dies down it's also a good time to think about giving to strangers, specifically folks who didn't enjoy much seasonal cheer.

We all know about the major philanthropic organizations that put on big end-of-year, reason-for-the-season giving pushes. If you've already given to Goodwill, Salvation Army, Toys for Tots or your more local charity of choice, that's fantastic.

If, however, the chaos of Christmas got in the way of donating to your favorite nonprofit, don't despair. They'll gladly take your gift whenever you can get around to it.

And if you contribute by Dec. 31, it also could help your personal tax bill bottom line.

Getting the tax most out of gifts: Taxpayers who itemize can include charitable gifts on their Schedule A. For most folks, that means that all our donations are deductible.

Big givers might face a limit, as will folks whose overall itemized expenses are reduced because they earn over a certain amount; $159,950 is the cutoff amount for 2008 returns.

So go ahead and give by the end of the year to do unto others and do yourself some tax good, too.

And even if you don't get a tax break or get a reduced one, you'll still get the full benefit of knowing you helped out someone else.

Interesting ways to give: Ideal Bite put together this list of intriguing ways to give that I didn't know about.

• CharityUSA -- Choose a specialized e-mail account from a variety of causes and your electronic messages will help support that group.
• Care2 -- Test your knowledge and, among other things, help conserve land, assist children and stop violence against women. 
  
• TheNonProfits -- Here you'll find links to more than 50 different click-to-donate sites.

Ways to help other than donating directly include:

• Care2 E-mail -- Help different social justice and eco-charities with your free, donation-linked email account.    
• Free Rice -- This online game help you brush up your vocabulary. For each answer you get right, you'll donate 20 grains of rice to the UN World Food Program.   
• GoodSearch -- This search engine powered by Yahoo donates 50  percent of revenues to charities that you choose.

More giving ideas and discussions can be found in my year-end moves post, as well as in this IRS Web page about year-end donations , Practically Speaking and Fun Times Guide to Money & Finances.

Salvation Army drummer photo
courtesy pheezy & Flickr/Creative Commons

2008 Year-end Money Moves: Giving

The Year-end Money Moves series is back, this time with tips on giving by by Dec. 31.

Apologies for the fits-and-starts appearances this year of the five-part presentation. It's been a crazy winding down of 2008 and we've still got a couple of weeks to go!

Part 1 of our Dec. 31 deadline series took a look at tax moves to make and debuted Dec. 2. Part 2, investment moves to make now, showed up on eight days later. And year-end retirement steps, Part 3 of the series, appeared on the ol' blog on Dec. 11.

Today's installment, Part 4: Giving, examines how helping out others can also be a perfect financial and tax gift to yourself. There are lots of opportunities here, so let's get started!

Know the ground rules
Uncle Sam encourages a charitable spirit, as long as you follow the tax agency's guidelines. First, you must itemize to deduct any donations. If you claim the standard deduction, which most taxpayers do, your generosity will help out your charity of choice, won't help reduce your tax liability.

Itemizing taxpayers also must be sure to give to an organization that has been vetted by the tax agency. Check Publication 78 to ensure the nonprofit meets IRS standards.

You also need to make sure you document your gifts. The IRS now demands that you have a canceled check, bank record or an official receipt from the charity to verify your gift, regardless of how large or small it is. You don't have to send this info to the IRS with your return, but if the IRS asks and you can't produce the document, your gift could be disallowed.

And, in keeping with this post's theme, remember that timing is everything. To take advantage of a donation on your coming tax return, you need to make the gift by Dec. 31.

Household goods can be good tax breaks
Donating household goods and clothing that you no longer need also can help out your bottom tax line and others.

Unfortunately, some folks were giving away crap under the guise of helping out others. Yes, I said it: Crap. And the only ones they were helping were themselves, by making inflated tax deduction claims regarding the worth of the items.

So lawmakers decided to make it a requirement that any donated clothing or household goods be in good or better shape. If they're not, then the IRS can automatically disallow your deduction.

The key here is to use the true fair market value of your gift. There are several software programs that can help you figure this out, as well as IRS Publication 561, Determining the Value of Donated Property. You also might check out eBay to see what the going price is for an item you're giving to your local Goodwill or Salvation Army branch.

So be an ethical giver. Don't try to pawn off your crap on groups trying to help out others. No one wants your raggedly socks or slacks that are so worn you can literally see through the seat. If your goods are that awful, be honest and drop them in your trash can. Then send a check to the charity instead.

The payoff of appreciated property
If in rebalancing your portfolio after this difficult stock market year, you find an asset no longer fits your investment strategy, it could be a perfect charitable gift.

As long as the asset has increased in value (admittedly a challenge in 2008, but possible if you've had the asset for a while) and you've owned it for more than a year, you can give it to a nonprofit and deduct its full fair market value. The charity then can use it and you avoid any capital gains tax on the asset's appreciation.

To get the maximum tax benefit here, make sure you've held the asset for the full 12 months plus one day; if you give away property held one year or less, you only are allowed to claim a deduction on the price you paid for it.

The value of vehicular donations
Ready to dump that jalopy you've been puttering around in? Think about giving it to a charity instead. The donation could be more valuable to you as a tax write-off than what you'd get for it or its parts.

But in giving your vehicle away, you must make sure you follow the tougher rules that the IRS put in place several years ago. Unfortunately, some folks overvalued their auto donations (just like those ratty clothes they also gave away), so now the IRS has more complicated guidelines to assess the proper donation claim in these cases.

Your actual automotive gift tax break depends not only on the actual, fair market value of your vehicular donation, but also upon how the charity uses the car (or van or truck or motorcycle or even boat).

You can find details on the rules in IRS Publication 4303, A Donor's Guide to Vehicle Donations, as well as in this story.

A special opportunity for older donors
If you are 70½ or older, you can have money from your IRA sent directly to your favorite charity. The option is applies to both traditional IRA and Roth accounts, but it's probably more beneficial to traditional IRA account holders, since much of the money in these accounts is eventually taxable.

When it goes straight to a charity, usually in the form or the account holder's required minimum distribution, the contributed cash is not counted as taxable income to the IRA owner.

The big drawback here is that these direct gifts from an IRA are not deductible. That, however, might not be that much of a disincentive, since many older taxpayers (like most taxpayers of all ages) do not itemize.

So far, this direct from IRA to charity strategy is still effective for 2008. However,  a new law  (as soon as Dubya signs the legislation) will waive the RMD rule in 2009 and that could cost charities some money next year.

As for 2008, there's still a possibility that the Treasury Department will make some changes before the year ends regarding 2008 RMDs.

Keeping it in the family
Some taxpayers also will want to look at giving financial gifts to family (and friends) this holiday season, or at other times of the year.

In 2008, you can give up to $12,000 (or $24,000 for married couples) to as many individuals as you like or can afford -- and if you've got a lot of $12K chunks to pass out, let's talk! These gifts have no tax ramifications for either the giver or the recipient.

And remember that this gift doesn't have to be cash. You can give up to $12,000 worth of appreciated securities to someone.

This might be something to think about if, for example, your retired parents' income is low enough to allow them to take advantage of the zero capital gains rate. Give them appreciated stock worth $12,000 by Dec. 31 and they can sell the asset any time before by Dec. 31, 2010, and not owe any capital gains taxes.

Will RMD change hurt charities?

Although I'm nowhere near 70½ years old, the required minimum distribution issue has been on my mind of late.

Maybe it's because I do have relatives who are older and worrying about their investments. They already had that "never enough money" mindset, and the recent stock market downturn has freaked them out pretty good.

So I'm glad for them that, in 2009 at least, they won't have to pull money out of their traditional IRAs or tax-deferred company pension accounts. The 2008 RMD is another matter, as blogged about here.

But I'm also a bit concerned about how the RMD change might affect charities.

Unintended tax consequences? It seems that we have a bit of dueling tax laws right now.

Back in October, one of the many provisions added to the financial services bailout bill, officially known as the Emergency Economic Stabilization Act of 2008, was the extension of a specific charitable tax break option to older philanthropists. Through 2009, anyone who is 70½ or older now can have money transferred directly from an IRA to a qualified charity.

This option, first approved in 2006, was a particularly welcome change for folks who had to take RMDs but didn't really need the money. I know that's probably not a lot of folks, especially in this economic climate. But still, for those folks it meant they could satisfy their tax obligations by sending the IRS-mandated withdrawal amount (up to $100,000) to a favorite charity and, since they didn't take possession of the cash, they didn't owe any tax on it.

Of course, they didn't get a charitable deduction either, but in these specific instances, it was a good move.

RMDs suspended: Then came last week's Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), with its one-year RMD suspension. The measure is still awaiting Dubya's expected signature so it can become law.

With RMDs no longer an issue in 2009, will charities who got such transfers suffer next year? Probably.

Of course, again considering the general financial outlook nowadays, the nonprofits probably weren't going to get as much money anyway. As I blogged about back in September, the dissolution of many traditional corporate givers has already put charities in a tighter than usual sport. And along comes the Bernard Madoff scam, which also caught nonprofits off guard.

Still, it seems to me a bit of a kick-them-while-they're-down situation, even if it wasn't intended that way.

Still available, just not as appealing: I hope I'm just being a bit too pessimistic. Dick O’Donnell, senior tax analyst from the Tax & Accounting business of Thomson Reuters, says that the new RMD law "does and doesn't" necessarily affect the IRA-to-charity giving option.

"The provision for the qualified charitable distribution applies to 'any otherwise taxable distribution made directly by IRA trustee to the charitable organization on or after the date the IRA owner turns 70½,'" says O'Donnell. "There's not a requirement that it has to be the required minimum distribution for that year, but it worked well for folks who had to take the distribution even though they didn't need  to take one."

So O'Donnell gives me hope that some eligible older donors will still be generous. I know times are tough for most everyone, but when folks can give to others who need a little more help than they, with or without the encouragement of the tax code, it restores my confidence in my species.