“In this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin’s declaration is likely the most famous tax quote ever. But honestly, it’s rather negative. Consider instead this quote by Oliver Wendell Holmes, Jr., which is inscribed above the entrance to the IRS headquarters in Washington, D.C. “Taxes are what we pay for a civilized society.”
Whatever your thoughts on the subject, taxes are a yearly fact of life, and it’s nearly time to start thinking about them again. In this special section, you’ll find stories on how to find a reputable tax preparer, the best tax-smart savings accounts, the tax impacts of charitable giving, and how one local family made it their business to help people with their taxes.
Charitable Donations The Basics of Giving
You know the old adage, It’s better to give than to receive. With proper planning, it’s possible to do both at the same time. Especially during this season of giving, your financial goals may include giving to the causes most important to you. As you plan, these strategies can help you make the greatest impact while potentially receiving tax savings, too.
Ground rules for giving
The tax aspects of charitable giving can be complex. It’s always wise to consult a tax professional about your giving strategy. That said, here are a few ground rules for charitable giving:
Tax treatments by type of gift
The tax advantages of a charitable contribution generally depend on three factors: the recipient (only donations to qualified charities are deductible), how you structure the gift, and the type of asset you choose to give. Different types of charitable donations—cash, stock or personal property—offer different tax advantages and drawbacks:
Giving through specialized charitable vehicles
While gifts of cash or appreciated investments can be given directly to a charity, it often makes sense to consider specialized charitable vehicles to make giving easier and to manage the tax benefits. If you give regularly, endowed giving vehicles like donor-advised funds or private foundations can make sense.
Donor-advised funds, for example, allow you to contribute cash or appreciated investments held for more than one year, receive a current-year tax deduction, and avoid paying capital gains tax on the sale of assets contributed. You can invest funds to potentially grow over time and then grant the assets to a worthy cause down the road.
If you prefer to leave assets to charity but also earn income for a period of time, a charitable remainder trust (CRT) or pooled income fund is worth exploring.
Each vehicle, strategy and provider may offer different benefits, including tax deductibility, administrative costs, flexibility, and account minimums. For more options or to compare options, talk with a financial planner to establish a giving approach to suit your needs.
How to Choose a Tax Preparer
Tax season is nearly here, and if you’re not planning to do your own taxes but you don’t have a tax preparer, now’s the time to find one.
But there are so many options. How do you choose?
If you’re still not sure where to start, ask friends, relatives, or co-workers for recommendations. Once you have a list of a few options, let the research begin!
IRS Directory of Federal Tax
Return Preparers with Credentials and Select Qualifications:
Make a Complaint About a Tax Return Preparer:
Better Business Bureau: