*Get a receipt. It’s required for any donation of $250 or more. For smaller donations, you can substitute a cancelled check or a payroll stub showing your contribution. The receipt should state the value of any goods or services provided in exchange for your contribution. Address labels and calendars that arrive in your mailbox unrequested don’t count. An email receipt from the charity is just as acceptable as one that arrives by mail.

*Know your recipient. Not everybody who asks for a donation deserves one. Remember the Navy Veterans Association? It’s best, of course, if you’ve seen the group in action and know first-hand about the good it does. You can also check out charities through internet sites such as GuideStar, Charity Navigator and the Better Business Bureau.

*Clean out your closets and give away items in good condition. If you itemize deductions on your tax return, make a list of your donations so you can value them. Some charities that accept used goods offer valuation guides on their Web sites.

*Give appreciated securities such as stocks or mutual funds instead of cash. You avoid paying the capital gains tax, which is worthwhile even if you don’t itemize. If you itemize, you also get a tax deduction for the full amount of your donation. Giving away securities is one way to deal with the problem of not having kept good records showing your cost. If you want to give away securities on which have a loss, sell them first and donate the cash. That way you can take the tax loss, which doesn’t do the charity any good.

*Donate money directly from your IRA if you are older than 70 ½. If your IRA custodian makes the check out directly to the charity, you never have to pay taxes on the distribution. The down side is that you don’t get to take a charitable deduction. This technique is particularly valuable for people who don’t itemize deductions on their tax returns. Do it by mid-December to avoid the last-minute rush.

*Consider making next year’s contribution in advance. Your favorite charity or religious institution probably would be happy to have you pre-pay next year’s contribution. This can be a great strategy if you’re in a higher tax bracket this year than you will be next year or if you only itemize in alternate years, taking the standard deduction in between.

*A charitable gift fund or foundation might be right for you. Want to get a tax deduction right now but have your favorite charity get the money over a period of years? A fund or foundation can be your intermediary. One also may be able to help if you want to give a gift such as real estate, life insurance policies or closely-held stock that your chosen charity might not be equipped to accept.   Many large mutual fund companies and brokerage firms sponsor charitable gift funds. There also are foundations that serve specific geographic areas or types of charities.

*Get advice. Talk to your tax or financial adviser if you’re contemplating a really large gift. Your particular circumstances might make a difference in the best strategy for you to employ.

*Give your time and talents. Many organizations welcome volunteers. Hands-on help might be a particularly good idea if you aren’t able to give as much money this year as you have in the past. Getting involved can be psychologically rewarding–good for you as well as for the charity. And your out-of-pocket costs may even be deductible.

The Standard & Poor’s 500 Index is down 12% since the end of June and higher risk assets have fared even worse—small caps off 21%, developed foreign markets down 18%, emerging markets down 22%. With fear ruling the day, high-quality, profitable companies have been taken down along with the rest of the market.

The safe haven has been high quality bonds, particularly U.S. government bonds and highly rated municipals, but investors who have gone that route are paying a price too. Yields on the 10-year Treasury note are less than 2%, while those on the 30-year have been hovering just above 3%, and even dipped briefly below 3% this week.

While many fear a recession is in the wings, the numbers show the economy has been growing in spite of its problems. Employers are adding jobs, just not fast enough to keep up with population growth or reduce the ranks of the unemployed.

The market drop isn’t so much about what’s already happened as it is about fears of what may happen in the future. Clearly, many people are worried that a default in Greece could lead to defaults in other countries with heavy debt loads, hurting the banks that hold the debt and making recovery in Europe more difficult. On our side of the Atlantic, the debt ceiling debate hurt confidence in the ability of our elected leaders to solve pressing problem—and the fight over spending cuts and tax increases has just begun. It’s no wonder some people prefer to sell first and ask questions later.

At times like these, we need to shut out the background noise and focus on our long-term objectives. A down market is bad for sellers, but great for buyers who can hold on until things turn around

The most serious concern is what will happen at the death of the first partner in the relationship. When you can’t count on the government to protect the surviving partner, you need to do it yourself to the extent that you are able.

Here is a check list to get you started:

• Do your beneficiary designations reflect your wishes? If you want your partner to get your IRA, your retirement savings plan or your life insurance death benefit, you need to put that in writing on the proper form. Unless you really want your ex-spouse to get the money, you’d better be sure you filled out a new form.
• Do you have a will? Does it say what you want it to say? A will covers property that doesn’t pass to an heir through some other means, such as a beneficiary designation or by title. If you die without a will, state law determines who gets your property. Nonrelatives will be left out in the cold. Spouses in traditional marriages are guaranteed a stake, but they don’t get everything.
• Will your survivor have an adequate income without you? Since nontraditional relationships aren’t recognized, your partner won’t get a spousal benefit from Social Security when you retire or a survivor benefit when you die. Consider whether you should buy a life insurance policy.

A second area of concern is what happens if you become ill or disabled.

• Will your partner be allowed to make medical decisions for you—or even to visit you in the hospital? You need to put your wishes in writing. Appoint a health care surrogate and sign a living will.
• Who will make financial decisions for you if you are disabled? A durable power of attorney will cover that base.

Of course these documents aren’t just for people in non-traditional relationships. They’re important for everyone, including those who are single or in traditional marriages.

These documents should be drawn up by an attorney. Good legal advice is particularly important if you have relatives who might not like the idea of your partner getting your property and might challenge your will. If your estate is larger or more complicated, it might be a good idea to put your assets in a trust.

Putting property into joint ownership with right of survivorship is one way to make sure it ends up with your partner. That makes sense for a checking account you use to pay household bills or for a house if you are buying a property together and both contribute to the purchase. However, think twice before retitling real estate you already own. Remember that you’re giving up your right to sell it without the other person’s consent. In addition, retitling may have implications for property taxes, gift taxes, capital gains taxes and income taxes.

For brokerage accounts and bank accounts, “payable on death” titling gives you full control of the account while you are alive, while making sure your partner gets the account at your death.

A same-sex marriage may bring benefits if one of you works for an employer that recognizes the relationship or if you live in a state that recognizes the marriage. However, even then, it’s important to have legal documents in place in case you become ill while traveling. You’ll need to review your state’s rules if you pay state income tax, but when it comes to federal income taxes, Uncle Sam only recognizes traditional married couples. That can be either a plus or a minus, depending on your situation.

A better approach is to accept that some risk-taking is inevitable. The key to doing it right is to figure out what kind of and how much risk you are able and willing to handle. Contrary to some popular opinion, it’s not all about how old you are. Here are factors that are more important than age:

How much do you rely on your investments to meet your basic living expenses? If you’ve got the basics covered through Social Security, pensions and life annuities that guarantee payment over your lifetime, you can afford to take more risk with your investments.  If you don’t, you should either take less risk with your investments or consider a life annuity (not a variable annuity or equity index annuity) to fund the basics.

If you are married, what happens when one of you dies? What will be the financial position of the remaining spouse? If it’s likely to be precarious, you may be able to get life insurance to fill the gap. If not, you might consider buying an annuity that pays out as long as one of you is alive

Do you have a separate emergency fund or cash reserve to handle irregular expenses such as household and vehicle repairs, insurance deductibles and appliance replacement? If not, be sure you are keeping enough in relatively safe investments to cover those costs.

What kind of insurance do you have? Life? Disability? Long-term care? The more comprehensive your insurance coverage, the more risk you can afford to take in your investments. The more exposed you are, the more you need to set aside in cash or low-risk investments.

How soon might you need to spend the money? For some people, the answer is “never.” Some take only income from their investments and others never touch their money. Those people can invest for the long term on behalf of their heirs.  But if this is money you’ll be using to buy a car next year, you’re in the opposite category-you’re a short-term investor who needs safety and liquidity.

How’s your psychological makeup? Ask yourself how much of your money you’re honestly comfortable putting at risk, then don’t go over that amount. If  the thought of losing money gives you a panic attack, if you  freak out every time you hear the market is down or if you check your investments incessantly, aggressive investing is out of the question for you.

Many of us experienced first-hand the pain of loss during late 2008 and early 2009. I hope we all learned something about our comfort level with risk as a result. Did you sell investments and then miss out on the rebound? One way to avoid a repeat mistake is to adopt mental accounting. Think of your investments as being in separate imaginary buckets even when they are mixed together in the same account. You can have a “safe” bucket of CDs, money market accounts and high-quality bonds, and a “growth” bucket of stocks, stock funds and lower quality bond funds. You choose the balance you want between those two buckets and periodically move money from one to the other when things get too far out of line.

Most risk reduction methods involve some cost—you either pay an insurance premium or you accept a reduced return on your money. Bank CDs and their pitiful yields are an obvious example. However, some types of risk, notably the risk of something bad happening to a specific company or industry, can be reduced simply by diversification. That means spreading your money around and not concentrating it in one or just a few companies’ securities or in any single industry.

Keep in mind that no investment is completely risk-free. As the wrangling over the debt limit reminds us, government guarantees are only good if Congress puts up the money to fund them.  Lower-risk investments—meaning those that are less volatile—also are more vulnerable to inflation risk. Their low returns may not keep up with rising costs, which is why most of us should have at least some growth investments too. Just be sure the risks you take are right for you

Social Security choices grow out of the program’s rules:

• You will be penalized for taking benefits early (before age 66 for many of us) and rewarded for taking them late (up to age 70).

• Married people have a choice of collecting either a spousal benefit or a benefit based on their own work records.

• At the death of the first spouse, the survivor gets to receive the larger of the two benefits.

The choices a married couple make are influenced by evaluating how long each spouse is expected to live. For a 65-year-old nonsmoking couple, the odds are about 50-50 that one of them will live to be at least 92.

Here are a few examples of how couples can maximize their benefits.

Each example assumes this is a first marriage for both, and assumes the full retirement age is 66, which is true for those born between 1943 and 1954. If that doesn’t describe you, check the Social Security website (www.ssa.gov) to learn more. For simplicity in these examples, cost-of- living increases are not included.

CASE NO. 1

Both spouses, of similar ages, each earned benefits based on their own work records. At the full retirement age of 66, he has a $20,000 available benefit; she has a higher available benefit, $22,000.

The strategy

The spouse with the lower earned benefit starts collecting it at 66. The spouse with the higher benefit starts collecting the spousal benefit — later switching to his or her own higher benefit at 70.

How it works

Age 66: The husband starts collecting his earned benefit, $20,000. The wife, at that point, starts collecting the spousal benefit, $10,000 (50 percent of her husband’s benefit, based on this example).

Age 70: The husband continues his maximum benefit, $20,000; but the wife can now collect her full available benefit, $29,040 (increased to 132 percent of her original benefit because she took advantage of the delayed retirement credit).

The survivor’s benefit: $29,040.

By her giving up $12,000 in benefits for each year from age 66 to 70 ($48,000), the couple qualifies for the extra $7,040 a year in her benefit for as long as at least one of them is alive. The break-even figure, at which this strategy becomes better than having taken the full benefit at age 66: 6.8 years.

Note: You must wait until 66, the full retirement age, to apply for the spousal benefit for this strategy to work.

CASE NO. 2

Both spouses’ ages are no more than a few years apart. At the full retirement age of 66, he has an available earned benefit of $22,000. She has a spousal benefit of $11,000 (limited or no earnings history).

The strategy

The spouse with the earned benefit files for Social Security at 66, the full retirement age — but suspends benefits until age 70. This allows the other spouse to start collecting spousal benefits.

How it works

Age 66: The husband collects no benefit. The wife collects her spousal benefit, $11,000.

Age 70: The husband begins collecting his benefit, which with the delayed retirement credit is now $29,040; the wife continues collecting her spousal benefit of $11,000.

The survivor’s benefit: $29,040.

By him giving up $22,000 in benefits for each year from age 66 to 70 ($88,000), the couple qualified for the extra $7,040 a year for as long as at least one of them is alive. The break-even figure, at which this strategy becomes better than having taken the full benefit at age 66: 12.5 years.

Note: There is no extra credit for delaying spousal benefits past 66.

CASE NO. 3

The husband is much older or in poor health. At the full retirement age of 66, he has an available earned benefit of $22,000. She has a smaller benefit because of limited or no work history.

The strategy

The younger spouse collects the spousal benefit as early as possible, while the older spouse, with the higher benefit, waits until 70 to take advantage of the delayed retirement credit. The greater the age difference, the more beneficial it is for the older spouse to wait to collect.

How it works

Age 66: (wife is 58, in this example), no benefits collected.

Age 70: The husband begins collecting his benefit, which with the delayed retirement credit is now $29,040; the wife, now 62, collects her spousal benefit of $7,700 (35 percent of $22,000, his age 66 benefit).

The survivor’s benefit: $29,040.

His benefit and the break-even on his benefit are the same as the husband’s in Case No. 2. What’s different in this case is that the wife is starting her benefit at age 62 instead of waiting until age 66. She should delay only if she is still working (earned-income limits apply if you are younger than 66) or if she expects her husband to still be alive when she turns 78, the break-even point for this strategy. He will be 86 when she is 78. His choice to delay benefits is a gift that will benefit her for the rest of her life.

BUT . . .

What if you can’t get by without some income from Social Security? Take the smaller benefit first, and wait to earn as much as you can in deferred retirement credits on the larger benefit.

Don’t expect to start out living large, especially if you graduate with student loans or credit card debt.  Living at home or sharing costs with a roommate may be your best bet until you’ve accumulated some savings.

Save a little each paycheck to build up an emergency fund. If you’ve got access to a credit union through payroll deduction, that’s probably your best option. Financial emergencies are part of life and can lead to credit card debt if you don’t have an emergency fund you can tap.

Steer clear of  credit card debt. Only charge what you know you’ll be able to pay off in full when the bill arrives. If you already have credit card debt, avoid new charges and pay more than the minimum each month to whittle down your balance.

Learn to cook (if you don’t already know how). Make restaurant and fast food meals an occasional treat instead of a regular routine. Home cooking is less expensive and better for you.

If you’re fortunate enough to land a job with a retirement savings plan, be sure to sign up, even if you can only afford to contribute a small amount in the beginning. If your company matches your savings, don’t leave  free money on the table—contribute enough to get the maximum match. Choose a balanced fund that invests in both stocks and bonds or create your own balance by putting about two-thirds of your contributions into a broad stock market fund and one-third into a bond fund.

Here are some tips designed to alert you to the tax implications of some of the more common 2010 transitions. If one of these fits your circumstances, take this as a cue to do further research or talk to a tax professional about your situation.

Did you change jobs? Some job-hunting expenses, including travel to interviews, are deductible as miscellaneous itemized deductions. If you moved to take a new job, your moving expenses may be deductible if the new job is at least 50 miles farther from home than your old one. Unfortunately, unemployment benefits and severance pay are taxable.

Did your income drop substantially? You may be eligible for tax breaks that you didn’t qualify for in the past, such as the Savers Credit, which gives a tax break for retirement savings contributions for those with incomes below $27,750 (single) or $55,500 (married filing jointly). Check out the Earned Income Credit, too, especially if you have dependent children.

Did you start a business or work as an independent contractor? Your expenses are likely deductible, including the cost of any equipment you bought. One disadvantage of being the owner is that you have to pay self-employment tax — both the employer and employee share of Social Security and Medicare taxes. One advantage is that you can deduct retirement plan contributions. In fact, you have until April 18 to make a contribution to a Simplified Employee Pension, or SEP, that can be deducted on your 2010 return. If you’re new at reporting business income, this could be a good year to get advice from a tax pro.

Did you sell your home at a loss or lose it in foreclosure? Bad news: A loss on the sale of your residence is not deductible. If your lender forgave part of what you owed on your mortgage, that’s considered income to you. However, it’s generally not taxable if the property was your home.

Did you refinance for the second, third or more time? Be sure to deduct points paid on the last refinancing if you were carrying those costs forward from prior years.

Did you help out family members? If your grown children returned to the nest after losing their jobs, you might be able to claim them again as dependents, depending on their ages and income. The income limit for most adults is $3,650, whether or not they live with you. If the grandkids moved in and you’re now their main support, you may qualify for even more benefits.

Did you have a tax milestone birthday? If you turned 59 ½ you’re now eligible to withdraw from your retirement plans without penalty. Of course, that doesn’t mean it’s a good idea to do it. If you turned 70 ½ last year, be sure to take your 2010 required minimum distributions from retirement accounts by April 1.

Did you marry, divorce or lose your spouse? Because filing status is based on marital status, a change affects exemptions, standard deduction, tax rates and the income limitations for many deductions and credits. Your income may have changed, too. That makes this an ideal time to consult a tax professional even if you return to being a do-it-yourselfer next year.

Still looking for a way to save a few bucks on your taxes? It’s not too late. If you or your spouse had earned income last year, you can contribute to an IRA, which may be deductible. Even if you don’t qualify for a traditional IRA deduction, you may be able to contribute to a Roth IRA, making future earnings tax-free, not just tax-deferred. You can set aside up to $6,000 apiece if you are 50 or older ($5,000 if you are younger) each year. April 18 is the contribution deadline for the 2010 tax year.

Haven’t done your tax return yet? You’ve got plenty of company. Through February, filings were running about 3 percent behind last year. The IRS couldn’t even accept some 1040 forms until mid February because of last-minute congressional tinkering with the tax law. Since then, brokerage firms and mutual fund companies have been sending out corrected 1099 forms, reclassifying dividend income and annoying the early filers. Aren’t you glad you waited?

Here are some tips to help you start the year right:

Figure out where you stand. Use your year-end statements to add up everything you own. Subtract what you owe and you’ve got your net worth. Do this each year and you can track whether you’re moving forward or backward financially. For the most comprehensive approach, include your home, vehicles and other property.

Know where your money is. Do you have too much in stocks or too little? Do you have enough in cash or CDs to tide you through an emergency? The right amount will vary depending on your age, overall wealth and risk tolerance. If you’ve drawn down your cash, you may need to sell other assets to replenish it. If you’ve got all your money in bonds, you may want to add some stocks for growth. Move your money if things have gotten out of whack.

 Consider refinancing. You’ve probably already refinanced your mortgage if you were eligible, but what about your car loan? Many people don’t realize that other types of loans can be refinanced. And could you move your credit card debt to a lower-interest card through a balance transfer? That’s a form of refinancing that may be worthwhile if the difference in rates is enough to overcome the balance transfer fee.

Get your just rewards. Are you paying your credit card balance off each month? Be sure to use a card that gives you cash back or another benefit you really value. Keep your extra cash in a money market account that pays actual interest. It’s worth a few minutes of your time to research rates.

Do something about debt. If you’re carrying a balance on your credit cards, it’s time to get serious about eliminating debt. Step 1 is to stop accruing new debt. That may mean that you need to stop using your cards except when absolutely necessary. Step 2 is to start paying more than the minimum payment on the card with the highest interest rate. Step 3 is to develop a serious plan for whittling down your debt.  

Take a look at your life insurance. Are you still carrying life insurance even though you no longer have any dependents? You might consider converting to a fully paid-up policy or dropping your insurance altogether. On the other hand, if you’ve got children at home or debts that your spouse would find difficult to repay, you may need to increase your coverage by adding a term policy.

Plan your giving. If you own appreciated securities in a taxable account, they’re the ideal currency for making charitable contributions. You get a full deduction and you avoid paying capital gains tax. Or, if you’re 70 ½ or older and have an IRA, you can make direct gifts from your IRA to charity and never pay income tax on the money. You don’t get a deduction either, but this still can be a great tool, especially for those who don’t itemize on their returns.

 Make your wishes known. Check to see that you have the basic estate planning documents and that they are up to date. You need a will, durable power of attorney, health care power of attorney and a living will. Having these in place will make it far more likely that your last wishes will be carried out.

 I hope 2011 will be a happy and prosperous new year for all of you!

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