Armchair Millionaire Community Bulletin: The Rewards of Giving Back

Donating your money, time or property to good causes does more than just make you feel good--it also can mean a very nice deduction come tax time. But you need to know the rules to do it right.

New York, New York (PRWEB) July 26, 2005 -- According to the Catalogue for Philanthropy, the average charitable contribution was $4,484 in 2002, the most recent year for which data is available. Thats no small potatoes, and can make a big difference in the amount of tax you owe.

As these comments from the Armchair Millionaire community attest, there are lots of ways you can give back to your community:

I've been on a drive to give to Goodwill as much as possible. Since Im a packrat this has meant five full truckloads so far. I see two main benefits. First, I get to clean up my house and simplify my life. Second, I have a lot of electronics, clothes and furniture that other people can get more use out of. Minor benefits include helping out the environment by re-using goods and a small tax deduction." --Chris L.

I give 10 percent to churches. I also make annual monetary donations to several non-profit organizations. I try to give to any organization that helps the poor, children and cancer survivors. I also recently began volunteering as a mentor in a program to assist teenage inner city girls." --Teej

Uncle Sam does encourage you to support good causes by offering tax breaks for your contributions, but you need to play by his rules. To make sure your deductions will withstand scrutiny, keep meticulous records and understand what you can and cannot deduct. My guide sets out the rules on the most common ways to give to charities.

The Armchair Millionaires Guide to Giving

Contribute your cash. You can deduct the amount of cash donations you make to qualified organizations. Note that only contributions to qualified organizations count. That generally means charitable and religious organizations and nonprofit educational, environmental and medical organizations. It generally does not include civic leagues, social or sports groups, political groups, or individuals (so, no, that birthday check for your niece is not tax-deductible). If you have any doubt, just ask the organization. And if you contribute more than $250 to any one organization, be sure to get written acknowledgement--you wont be able to deduct it otherwise.

Volunteer your time. If you volunteer for a qualified organization, you can deduct certain expenses associated with that. These include travel expenses to get to your volunteer location (at 14 cents per mile), a uniform, if its required, and some other unreimbursed expenses. Note that you cant take a deduction for your personal expenses or for the value of your time or services.

Donate your stuff. Many charitable organizations will accept donations of used household items, such as clothing, furniture and appliances. The kicker here is that you can deduct only the fair market value of these items, which is usually far, far less than what you originally paid for them. The IRS does not provide fixed formulas for figuring fair market value, but its pretty safe to claim what you would have been able to sell the item for in a garage sale, or what it would sell for at a thrift shop.

Give away your old car. Many organizations are happy to take you old vehicle off your hands. If you claim a value of more than $500 for the car and the organization sells your car, your deduction is limited to the amount the organization received for it.

THE BOTTOM LINE: Donating your money, time or property to good causes does more than just make you feel good--it also can mean a very nice deduction come tax time. But you need to know the rules to do it right.

THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Can you still get rich investing in stocks? Log on to www.armchairmillionaire.com and let us know.

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Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

CONTACT INFORMATION:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com

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