Giving to Charity? Watch Out for These Tax Traps by Corliss Law Group Estate Planning Law Corporation
To give is divine. To err while giving is human.
For many donors eager to nail down tax deductions, contributing to charity can be as simple as writing a check. But tax laws often can be surprisingly tricky. While there are many tax-smart ways to donate, it can also be easy to make costly mistakes.
The mistakes run the gamut. Many thorny problems, for instance, stem from uncertainty over how to value gifts. Other donors stumble because they don't pay attention to the fine print on such long-cherished techniques as giving stock to charity. And still others trip over paperwork issues, such as getting proper acknowledgment for gifts on a timely basis.
Many generous donors "have learned their lessons the hard and expensive way," says Victoria Bjorklund, a charitable-giving consultant and a retired partner at the law firm Simpson Thacher & Bartlett LLP.
How can donors avoid these traps? It may help to keep in mind the following (seemingly) simple ideas—as well as a few common errors.