Donating

Steve Messing

Dec. 31 is the deadline to contribute to your favorite charity and claim the gift amount on your 2011 tax return. If you own a stock or other asset that's gained value and you're willing to part with it, you can give it directly to charities that accept such gifts. The non-profit gets the stock that it can sell. You get to deduct the asset's value as a charitable gift. Even better, you won't owe any capital gains taxes on the appreciation (if you've owned the asset more than a year). The deduction you receive equals its current value, and you can claim the full amount, says Steve Messing, of Berkowitz, Dick, Pollack & Brant in Miami.

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Retirement Planning

You can contribute up to $16,500 tax-free to your retirement through your company 401(k). If you're over age 50, you can sock away an additional $5,500 catch-up contribution for a total of $22,000. The amount contributed lowers your taxable income. If you don't have a 401(k), you can make a deductible contribution to a traditional IRA, but at a smaller amount. The contribution limit for 2011 is $5,000. If you're over age 50, you can sock away an additional $1,000 catch-up contribution for a total of up to $6,000 out of your taxable income. "That money is better off in your retirement account growing tax-deferred than being taxed currently by Uncle Sam," says Ana Maria Martinetti-Katz, director of financial planning at Cathy Pareto and Associates in Coral Gables.

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Redirecting

If you're age 70½ and you don't need the money from your traditional IRA for living expenses, you can make a charitable donation directly out of your IRA up to $100,000. Making such a move can be helpful if your IRA has appreciated significantly over the years and you have to take required minimum distributions. "The added benefit is that you get to exclude that distribution from gross income," says Elaine King, of Lubitz Financial Group. If you're married and file a joint return, each spouse could make the donation. The rule is scheduled to expire Dec. 31.