There are many ways to reduce your tax liability and the way to minimize your tax burden is by reducing your taxable income. There are a number of ways to accomplish this, from deferring income to maximizing your IRA/401K contributions. However, one of the best ways to improve your tax situation going into the filing season is by increasing your charitable donations.

Advantages of Giving to Charity: There are several reasons to consider giving more to your favorite charity before the end of every year. Here are three of the biggest:

• Your Gift is Helping Others: Though tax savings is a strong incentive to donate to charity, you should also be passionate about the work of the organization you are giving to. Think of it as more than just a donation, but as an investment in the lives of others less fortunate than you and/or the betterment of the entire community. Chances are you know someone in your family or circle of friends that has been helped by one of these fine organizations. And who knows? There may come a day when you need a helping hand as well.

• Charitable Gifts have Generous Limits for Taking Deductions: Many people do not realize that the IRS allows you to deduct up to 50% of your adjusted gross income (AGI) for contributions to public charities. For example, if your AGI is $80,000, you are allowed to give up to $40,000 to a public charity. And even if your donations exceed the allowed amount to claim a deduction, your excess gift can be carried over to the following tax year. But statistically, most individuals are nowhere near maximizing their allowable charity deduction, so it is highly likely you have some extra room to give before the end of the year.

• You are allowed to Donate Non-Cash Items: If you are short on cash, you can still benefit from the charity deduction if you have other items to give away that you are no longer using. Examples include furniture, computers, office equipment, clothing, automobiles and much more. If you have owned these items for one year or longer, you are allowed to claim fair market value when you donate them to a qualified charity such as the Goodwill or Salvation Army. Two things to bear in mind when donating non-cash items; only donate items that are in “good or better” condition (otherwise, they probably won’t be accepted and even if they are, the IRS won’t allow a deduction for them) and always get a receipt.

Organizations that Qualify as Public Charities: Most charities qualify for at least a 20% or a 30% deduction. Those that qualify for the 50% deduction include churches, religious organizations, tax-exempt educational organizations, tax-exempt hospitals and several others. But as mentioned earlier, even a deduction of up to 20% or 30% is sufficient for most taxpayers.

For further information about the tax implications of charitable donations, which charities qualify for deductions and other year-end tax planning strategies, speak to your local accountant.