Giving to Charity (Year-End Tax Tips)

Giving money away to a worthy cause is a great tax strategy to implement at the end of the year. For one thing, you'll be able to assess how much money you have left over to donate, and secondly you're in a better position to estimate your itemized deductions to find out if you are eligible to itemize and how much extra deductions you might need to tame your tax liabilities.

Charitable donations are tax deductible, but only if you itemize. If your itemized deductions don't even come close to your standard deduction amount for 2008, then you'll benefit more by taking the standard deduction and forgoing the charitable deduction. If you are close to itemizing, giving to charity could push you over the threshold, thus making you eligible to deduct a wide range of expenses from medical bills to tax preparation fees.

And this year, the IRS is offering additional incentives to give charitably. Donations for disaster relief in the Midwest are fully deductible, up to 100% of AGI. Charitable contributions are normally limited to 50% of AGI. So donors who are feeling extra generous now have a mechanism for receiving a full deduction for their donations.

When giving to charity, it's always a smart idea to first conduct some due diligence. Make sure the charity is a qualified, and you obtain a receipt for your donation. Joanne Fritz, About.com's Guide to Nonprofits, provides some additional tips for giving safely.

As a reminder, charitable donations must be made by December 31st. This is true whether you give money or donate non-cash goods.