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Give and receive, and you shall the biggest tax benefit. How?

Start them young, start small. Train your children to become generous and selfless to ensure a future generation of givers. However, in the United States, there is a strong savings versus investing impulse. But people can reconcile the two different ideas. One can do various charity works and give a small amount of money to some causes. Another option is to earn more and save more. That way, you can spend a larger part of your earnings toward donations.

Once your salary increases, you can increase the donations you make. But before anything else, make sure to follow the IRS rules to justify your contribution to charitable institutions. Below are some guidelines:

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  Decide on the total amount of donations the following year. Every year, list down all the charities and the corresponding amounts to be given to each institution. Forget not to allocate some funds for unknown causes in advance. Adjust your monetary contributions, if you can.

  
  


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  Shun street solicitations. Yes, it is heartbreaking to walk away from someone who cries for help. But avoiding them is the best option for you. They might represent deceiving entities not registered in the IRS. Better be safe than sorry.

  
  


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  Keep the receipts. It is imperative to keep all cash donations with receipts or canceled checks for auditing purposes.

  
  


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  Say no to propped-up value. As of 2007, in-kind contributions, including clothings and furniture, must be in good or better condition and valued strictly. But if the worth of an item is lower than $500, regardless of its condition, may be claimed provided an individual includes a professional appraisal on his tax return.

  
  

Give more if you have plenty of money. Remember the following rules if you opt to maximize your contributions:

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  If you are fortunate enough to allocate 50% of your adjusted gross income, by all means, do it. That is actually the annual deductible limit. For private foundations, the AGI limit is 30%.

  
  


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  Take advantage of the tax-free, limited-time deduction for donations made directly from your Traditional IRA to eligible charitable organizations. But before considering this, seek a professional advice.

  
  


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  If you want to make a huge contribution, say your considerable paper long-term capital gains, donate those instead of selling it. Claim a full deduction for its current market value, pay the capital gains tax, and give only the diminished proceeds. But you can only subtract up to 30% of your AGI for gifts to a public charity.

  
  


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  An individual is only entitled to the net of his donation after deducting the entertainment or tangible value. Also, buying products for a cause or given as a premium for a donation are constricted to the net of a donation or purchase which benefits the institution.

  
  

Consider your income and tax-deduction options when making a donation. That is the real essence of giving and receiving.