Charity Begins At Home

Every year at tax time, it is appropriate for columns like this to examine some aspect of our Byzantine income tax code to try to make life easier for our readers.

Well, it's gotten so complex, so arcane that a stat I saw for last year indicates that a majority of Americans now have to get professional help doing their returns. It seems that keeping up with the huge and ever-changing tax code is now only for full time tax experts; no longer can regular folk cope.

One area that the average doc can understand and has the time to control is charitable giving. Now I am not talking about the free care that every physician since Hippocrates has dispensed. It is not taxable so we don't need to worry about it.

Nor am I talking about the large amount of free care that we "give" as a result of our miscoding, inattention to our accounts receivable, or the losses from the delay-and-deny insurance companies under whose yoke we burden. It's all lost money, swept under the bridge and also not taxable. You can't pay on what you never received.

No, I am talking about the money and things that we consciously and intentionally give to recognized not-for-profit charities. Most docs itemize on their income taxes because it is generally beneficial for people in our income strata to do so, so we can deduct each charitable contribution. In doing my annual "term paper," as I call my review of receipts in preparation for the CPA, I'm always struck by the large number of charities that I end up giving to.

I am sure that each one is deserving and that either my wife or I had a good reason to give when we did so. The problem with our usual practice is that there is no rhyme or reason to it. No planning, no budgeting, and no assessing where we will get the bang we desire for our buck.

Now I know that stuff happens, like Katrina and Haiti, but still…where’s our planning? A few minutes spent in rational thought and discussion with your spouse could be eye-opening.

First of all, I have been mildly surprised by how much the donation total comes to when you don’t think, but just respond to disasters and appeals from friends about their pet causes. Is this total what you intended, more, or less?

When you contribute only in this reflexive manner, you also surrender any chance of prioritizing your giving or aggregating it where it may have the most impact. Even the most generous of us have our limits, including Bill Gates.

Incidentally, I once heard a talk given by one of the staffers from Gates' foundation and it was impressive how much thought and planning goes into his largesse. Now, he'll probably and deservedly get the Nobel Peace Prize while we have to content ourselves with some quiet personal satisfaction and positive karma. And a tax deduction.

As I was saying, it makes sense to call a family meeting early every year to determine a) how much you have/want to donate to charities and b) which one(s) you want to give to. If you follow this approach, you will feel better about what and where you are giving, and feel less guilt when politely turning down myriad friends and causes who approach you.

These causes, while worthy on their own, in sum represent an unwanted tax upon your resources and your guilt button.

In the interest of disclosure, I must say that I have tried this approach and have failed. It seems that I can either cough up for the Cause of the Moment and feel mildly taken advantage of, or be resolute, say no, and rightly or wrongly, feel guilty.

Maybe the answer is to codify our deliberations and put the result in writing. Keep the document in our wallets or checkbooks to remind us that we are Good, and we have, or will, give.

The other area at which we should look carefully are "in kind" donations, which generally means the used goods we give to Good Will, the Salvation Army, and the like. It's another area we don't think much about, but we should. Why?

Well, first of all, most of us are drowning in "stuff." George Carlin once said that, "Your house is a place to keep your stuff while you go out and get more stuff." And I've found that unburdening yourself of your clutter once in a while can be liberating.

So, a spring housecleaning is in order to unload as much junk as you can negotiate away from your spouse. Be careful, this is a tricky business and I have the scars to prove it. I don't care if your wife's beloved Aunt Nelly did give you a hand made ceramic from her last trip to wherever; they don't call them white elephants for nothing.

And if you make a list, estimate their value and get a receipt, it's like money in the bank. Ask your CPA what a reasonable percentage of the donations' value you can deduct. Sometimes the amount will surprise you if you actually itemize the giveaways.

Uncle Sam wants to ease our tax burden - just give him a chance. So clean out the garage, the attic, and the basement, and turn those dusty treasures into a hefty refund. As I said, charity begins at home.

Happy tax time.