The Day After

Since Christmas fell on a Sunday this year, there seems to be a compunction to jump back into the fray of life today. After all, it is a Monday. And we will have an entire week of the various reviews of 2005, the prognostications for 2006, and lists of various celebrities' New Year's Resolutions, which is unfortunate. I may review the significant events in Morrison Ranch before the week is out, but today seems like a good day to combine the sense of the season now passing with the bent of my stated profession of accounting, and talk about... giving.

I'm not thinking about the giving of presents, but the giving of money, tax deductible and otherwise. We Americans are incredibly generous folks, if you look at the facts. The Wall Street Journal (subscription only, so I can't link to it) has an op-ed today that begins with this:

Americans are "stingy." This was the accusation hurled at the U.S. almost exactly one year ago today by Jan England, United Nations Undersecretary for Humanitarian Affairs, immediately after the Asian tsunami disaster.

Even by U.N. standards, it was a particularly absurd anti-American slur -- although it no doubt expresses the view of many foreign elites, who have come to believe that government is the only true source of goodness and charity. In the weeks and months that followed the tsunami, American citizens dug deep into their wallets, donating some $1.78 billion to the relief effort in Asia -- dwarfing the contributions of other developed nations. Since October Americans have also contributed $78 million to assist the casualties of the Pakistan earthquake.

And lest there be any doubt that the Good Samaritan ethic is alive and well in America, consider the latest totals of charitable giving to help the New Orleans victims of Hurricane Katrina. The Center for Philanthropy at Indiana University announced last week that the total value of private donations in response to Hurricanes Katrina and Rita has reached $3.12 billion, thus "setting what is believed to be a record for a single disaster and recovery effort." This tsunami of aid dollars was donated in just three and a half months.

More astounding still is that this Gulf Coast aid is only a little more than 1/100th of what Americans donate to charities and churches every year. The quarter trillion dollars a year that Americans provide to sustain the Red Cross, the Salvation Army, Catholic Charities, the American Cancer Society, their local churches, universities and such is greater than the entire GDP of most countries.

I have married into an incredibly generous family that shares dollars, time and brainpower with the local Gilbert community in various facets, extending through the educational system from elementary to university; and this giving even goes beyond the borders of Arizona and outside of the United States. It's a great inspiration.

When I was preparing tax returns for folks as a public accounting CPA, I would tell them that our tax system actually encourages the generosity that many people naturally feel, so why not take advantage of it? I am scrupulous in following tax law, and this is a legal way to reduce taxes; in fact, it's encouraged. I know this is not a tax blog, and you shouldn't rely on my advice without talking to your accountant, but, in case you didn't know, I'll offer a few end-of-the-year thoughts about giving:

You can still give to the qualified charity of your choice this week and have it count as an itemized deduction on 2005's tax return (there is a provision in congress to allow those who do not itemize to deduct their charitable contributions, but it is not yet law).

In the wake of Hurricane Katrina, the President signed into law a provision allowing you to deduct contributions equaling 100% of your adjusted gross income for 2005, rather than the normal limit of 50%. This does not apply to gifts from foundations or donor advised funds.

On the local level, you can still contribute to Arizona schools through the tax credit program. If you are going to owe any AZ state tax, the amount can be offset by up to $300 for a couple filing jointly just by donating that $300 to the school program of your choice. In other words, you are re-directing some of your tax money to a specific program at a specific school. In additional other words, this doesn't really count as charity since it costs you nothing but a few minutes and your $300 out of pocket until you file your tax return, but it is a great way to have a voice in where your tax money goes. I have traditionally split my gifts among my various children's school programs (choir, yearbook, football), but you don't even need to have a child in school to take advantage of this opportunity. If this piques your interest, here's the link to the Gilbert District (yes, of course I'm partial to Gilbert), and you can do it online. I made my contribution online this year; about a week later I got my receipt by mail to give to my tax preparer (that's ME), and the entire procedure was painless.

Oh, and if you use a CPA to do your taxes, do me a favor; don't take your information to them on April 12th in a shoebox...