A: A:Giving money to charity not only makes you feel good, it can also cut your taxes. Charitable contributions qualify as a tax deduction, and they can help you avoid capital gains taxes, the Federal Alternative Minimum Tax (AMT), and even lower your estate taxes.
Q: SO ANY CHARITABLE CONTRIBUTION IS TAX DEDUCTIBLE?
A: Not exactly. Cash gifts to charities are deductible, but the deduction is limited to 50 percent of your adjusted gross income in a given year, says Mindy B. Kobrin, founder and chairman of iSupportCharity.org.
HOW DO I GET THE OTHER
A: Avoiding capital gains taxes is relative: “It depends on what the assets are, when you bought them, what their fair market value is, and what tax bracket that puts you in, based on the value of the gift,” Kobrin says. To avoid capital gains taxes, establish a charitable remainder trust and sell appreciated assets from within the trust, she adds.
As for avoiding the AMT, making contributions to charity over time can keep you from triggering it. And the amount you must give to charity to get a break on the death tax is based on a percentage of what you have, on what you give, and what your tax bracket is.