Xero Business Community (Feature Requests) / Per Employee Xero Pricing (not the RIDICULOUS ALTERNATIVE) & Comments

Over at Xero Community Blog Mike Block, CPA writes:

Per Employee Xero Pricing (not the RIDICULOUS ALTERNATIVE)

Started by Mike Block CPA Xero Silver Partner - 21 Dec 2013 in Feature Requests | Submitted

We badly need per employee Xero pricing.

Every other payroll company I have ever known charged based on employees or transactions. Xero prices are now LIKE A like a STOPPED CLOCK, which is ONLY RIGHT TWICE A DAY.

The $30 one employee plan seems inexpensive, especially now that Xero says it will cover up to five employees. However, it is likely to be ridiculously costly, because it does not include direct deposit, e-file and e-pay options. Any payroll service without this is UNPROFESSIONAL AND IRRESPONSIBLE, not only due to the time wasted, but due to the federal and state tax notices and penalties that will surely result. It will ESPECIALLY HURT THE CPAs AND CHARTERED ACCOUNTANTS XERO WANTS MOST. My initial solution was to sign up many one and two employee clients at the $39 introductory rate, for the 10 employee plan. However, you could only do that until 12/8/13, as it then became $70 a month. $40 a month for e-services, for one employee, is RIDICULOUS! We MUST either have E-SERVICES IN ALL PLANS OR APPROPRIATELY PRICED SEPARATELY!

Yes, in this case ALL CAPS means I am really YELLING!
10 employees for $70, 20 employees for $90 and 100 employees for $180 seem reasonable, especially with the 25% discount I give even non-clients. However, the number of employees per month is often variable. The XERO STOPPED CLOCK PRICES make 11 employees for $90 and 21 employees for $180 EQUALLY RIDICULOUS!

The very good Zen Payroll add on is $29 for one employee, $57 for 11 employees and $77 for 21 employees. The corresponding price for the AccountantsWorld payroll, which we can easily integrate, would be under $20, regardless of the number of employees.

XERO IS NOW HURTING ALL SMALL USERS AND PROFESSIONAL ACCOUNTANTS, by making us either CURSE XERO for wasted time, tax notices and penalties OR EXCESSIVE FEES. WE CANNOT START ANY NEW CLIENT OR RENEW EXISTING CLIENTS AT CURRENT XERO RATES, even though Xero seems to have the best payroll program. Most companies start payroll on January 1, so fast action is essential. It is also essential because no one should now enroll any new clients (or renew existing clients) in Xero payroll.

PLEASE VOTE for Per Employee Xero Pricing (not the RIDICULOUS ALTERNATIVE) to change this quickly and share using http://bit.ly/1evmS4u

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12 Replies

I agree. With our current cloud payroll system we pay per employee across all our clients. Payroll from xero won't be here in the UK for a while but you have my vote.

 

Stephen Quay 21 Dec 2013

Thank you very much Stephen. I promise to give you my vote at every opportunity.

 

Mike Block CPA Xero Silver Partner 21 Dec 2013

@Mike, I was a bit indifferent to this topic until I stopped to think about it. Al the payroll processors I am aware of either charge per employee, or by a small group (1-5, 6-10, etc.). My payroll processor charges by the payrun with a base charge, depending on whether it's weekly, etc., then a small upcharge for every employee over 10. I now agree that Xero should change it's pricing. I think inm the long run, as well as the short run, this will cost a lot of business for us all.

 

David Goldstein 22 Dec 2013

@David I also was indifferent until I thought about it. The current system will certainly cost us lots of business. It will make me take every new, upgrading and renewing client off Xero payroll. This could make many drop Xero or me entirely.

 

Mike Block CPA Xero Silver Partner 22 Dec 2013

@Mike, I really hope that Xero is watching and listening. Not sure why they devised their way of pricing payroll, but it will cost them dearly. Just wait until you hear the complaints after the one year @$39.00/mo going to whatever...it will be a very loud sound.

 

David Goldstein 22 Dec 2013

I cannot edit my original Feature Request, but we need separate charges for all types of features and entries, not simply payroll.

 

Mike Block CPA Xero Silver Partner 23 Dec 2013

I added my vote, because it *is* an important feature. Also, I mentioned it, as did others, during the Xero U.S. Roadshow. As Xero's rolling out the payroll feature in bundles of states, I decided it was best to continue processing payroll as I currently do.

And, I'm neither a CPA nor a CA, but I believe that bookkeepers are also going to feel the limitations of the Xero payroll offering, in its current state.

I believe Mike's feedback/constructive criticism is going to better inform the Xero developers, as they work to identify & resolve issues raised. Let's hope for more votes!

 

Paula Small 23 Dec 2013

@Paula, I agree with everything you said. And, of course, I voted as well.

 

David Goldstein 23 Dec 2013

Thank you to all who voted. We are moving this rather quickly. Now we each need to find (10?) friends to vote.

 

Mike Block CPA Xero Silver Partner 23 Dec 2013

I am both a QB ProAdvisor and a Xero Certified Advisor. I recently switched to Xero for my own company's accounting. I guess I don't understand why Xero is only charging $29 for the monthly business subscription, yet over twice as much for payroll. Seem kind of counter-productive in getting people to switch. I have a hard time believing that there is that much incremental cost per employee that would justify such high prices.

 

Dennis Thompson 23 Dec 2013

@ Dennis: YES! That is exactly what I meant when I said that Xero prices were like a stopped clock (only right twice a day). Hit a sweet spot and Xero beats all competitors. Otherwise, the incremental cost of one entry, employee, e-service or multi-currency ridiculous. Since no one can have exactly the bracketed number of items, month after month, the desire for simplicity is making Xero and its Advisors completely non-competitive 99% of the time.

It is especially crazy because Xero has done such a terrific job with add-ons, by helping us get exactly what we want. However, it now refuses to treat each of its own features and entries as an itemized add-on.

DID YOU VOTE?

 

Mike Block CPA Xero Silver Partner 23 Dec 2013

Mike,

Yes, I did vote for your petition. BTW, I enjoy your posts on Twitter regarding the pros and cons of Xero vs QB and QBO. I like QB, but I believe that Intuit as a company is handicapped by having to divide their attention between the past (QB Legacy Desktop Users) and the future ( the Cloud) whereas Xero is more tightly focused on the future. Seems like it is kind of hard to do both.

 

Dennis Thompson 24 Dec 2013

U.S. Tax Court rules against MBA student seeking tuition tax break

Patrick Temple-West for  Reuters / Chicago Tribune writes: The U.S. Tax Court has dealt a setback to young MBA students with little work experience who try to claim their tuition costs as a tax-deductible business expense, lawyers and accountants said on Thursday.

In a ruling on Monday, a Tax Court judge denied Adam Hart of Florida, who was studying for a Master of Business Administration degree in finance, a $17,138 tax deduction he claimed for his tuition costs in 2009. The IRS billed Hart for $2,572 in unpaid taxes.

Hart, now 31, who graduated in 2011 from the Rollins College MBA program in the state, did not have enough consistent work experience prior to starting school to claim the deduction, the judge ruled.

"There is no evidence in the record that (the) petitioner was carrying on a trade or business before he enrolled in the MBA program," wrote Tax Court Judge Kathleen Kerrigan.

Claiming MBA tuition as an ordinary, cost-of-business deduction is a narrow needle to thread, tax professionals said. The tax break cannot be claimed by law or medical students.

MBA students may be able to convince the IRS their education is an expense if they have years of consistent experience built up before starting a program, and then return to that career after graduation, professionals agreed.

The Tax Court decision will prevent MBA students without an established career path from claiming the tax break, lawyers and accountants said.

"Given where we are economically, it may be more difficult for younger professionals to establish themselves in careers. This in turn could make it more difficult to take advantage of the deduction," said John DeBoy, a tax lawyer at Covington & Burling LLP.

POSSIBLE CHALLENGES

Tax and accounting expert Robert Willens, who teaches MBA classes at Columbia University, said the tax break accounts for about one-third of the tuition cost a year for the students he knows who have been able to claim it.

Following Hart's Tax Court loss, "the IRS could decide to read it more broadly than it should be read and begin challenging people," Willens said.

Josh Nowack, an accountant in California, said he does between 30 and 50 tax returns a year that claim MBA tuition as a business expense. Students in high-tax states like New York and California can save between $5,000 and $10,000 with the MBA tax break.

He said a strong candidate for the tax break is an engineer, for example, who has worked for 15 years then gets an MBA to broaden his or her career opportunities.

But for Hart, who started his MBA program two years after receiving an undergraduate degree, the Tax Court ruling "was not surprising," Nowack said.

In an interview on Thursday, Hart said he would ask the Tax Court to reconsider his case with new evidence that shows he had more work experience before starting the MBA program.

Hart said he works now for McKesson Corp, a drug wholesaler, as a sales representative. He said he could owe the IRS up to $10,000 if he ultimately loses his case.

"I'm fighting this all the way to the end," Hart said.

(Reporting by Patrick Temple-West; Editing by Howard Goller and Jonathan Oatis)

Giving Stock to Charity: How Doing Good Can Cut Your Taxes

Dan Caplinger for the Motley Fool writes: The end of the year is almost on us, and charities are depending on you and millions of other Americans to make gifts of financial support. But before you write a check, bear in mind that the smarter move might be to take some of your winners from the stock market and use them to make your charitable gift. Giving stock to charity can not only give your charity the support it needs, but also benefit you by helping you cut your taxes.

The best way to give money away: appreciated stockGiven just how far the stock market has risen in the past several years, many investors are fortunate enough to have investments that have appreciated in value substantially. That's good news for the value of your investment portfolio, but if you own those investments in a taxable account, then you'll have to pay what could be a substantial amount of tax on the capital gains that those investments have earned since you bought them. Even at preferential long-term capital-gains rates, the prospect of paying as much as 20% of your hard-earned gains to the IRS probably isn't the kind of charity you had in mind.

To avoid that capital-gains liability, smart taxpayers use special provisions of the tax laws that allow you to use appreciated stock to make charitable gifts. When you give appreciated stock that you've held for longer than a year, you're allowed to take the full current market value of the shares as an itemized charitable deduction on your tax return.

Two things to keep in mind
There are a couple of traps to keep in mind when giving stock to charity. First, you're not allowed to deduct the fair market value on stock that you've held for a year or less. There, the capital gains would be treated as short-term, and as a result, you'd only be allowed to deduct the smaller amount that you actually paid for the shares, rather than their current appreciated value.

Second, if your stock has gone down in value, then this rule actually works against you. In that case, it makes more sense to sell the stock yourself, taking the capital loss on your own return, and then making a cash gift to charity from the sale proceeds, rather than giving stock to charity directly.

Give smartSome people don't like focusing too much on taxes when they consider their charitable gifts, feeling that it detracts from the true spirit of giving. But the tax aspects of giving stock to charity can actually make your philanthropic investing more interesting. Many wealthy investors pick specific investments in the hope of seeing huge gains that they can then use for their charitable gifts. For instance, many philanthropists familiar with the challenges that nonprofit hospitals and health care professionals face in treating HIV and hepatitis are aware 

of Gilead Sciences' (NASDAQ: GILD  ) efforts to fight those diseases. Investing in Gilead's efforts has been quite lucrative this year, as the stock has doubled in price in 2013 alone, making the shares valuable currency for year-end gifts among its shareholders. 

Similarly,Facebook (NASDAQ: FB  ) CEO Mark Zuckerberg used the doubling of his company's stock price in 2013 to great advantage for himself and his favored charity this month, giving 18 million shares of Facebook stock worth nearly $1 billion to the Silicon Valley Community Foundation. Meanwhile, even when philanthropic investors make less lucrative stock picks, they can use the resulting losses for tax-loss purposes.

As a way of making your charitable dollars go further, giving stock that has risen in value to charity has a lot going for it. With added tax benefits for you, you might be able to use your tax savings to make larger gifts than you otherwise would have been able to afford, helping those in need even more.

Top 5 Technology Secrets To Build Your Small Business in 2014

Entrepreneur / Reuters writes: For the 23 million small business owners in the U.S. who compete head to head against big-box stores every day, technology is a vital tool that's leveling the playing field for Main Street merchants.

Armed with a tablet and a few key apps, today's small businesses can tweet the day's specials, process a customer's credit card, run a complex loyalty program, manage payroll and much more. These new tools are ubiquitous, inexpensive, simple to use and make it easier than ever to compete with huge corporations.

To ring in the New Year, here are a few ways to utilize new technologies to help increase profits and stay ahead of competitors.

1. Move your business to the cloud. For front-office management tasks, many small-service companies still juggle a combination of paper, spreadsheets and calendars to stay organized. This archaic system can present many issues -- everything from searching through endless file cabinets for documents to making it tricky to share information. Utilizing cloud services can help alleviate many of these hassles.

There's a full-range of affordable cloud-based and mobile tools specially designed to manage customer scheduling, signups, time tracking and billing, among other duties. For example, app Front Desk helps personal trainers, dog walkers and other personal-service companies handles customer management and scheduling functions. For field-service businesses, like landscapers and painters, there is Jobber, which assists with quotes and routes. Another tool is StyleSeat, a platform that provides personal-care businesses, such as salons and stylists, services like emails. 

2. Ditch pricy point-of-sale (POS) solutions. Tablets and smartphones with free or premium apps can now replace full-blown POS systems, letting small retailers accept more than cash. For example, everyone from your local coffee shop to your babysitter can use the tiny mobile Square card reader on their Android or iOS device to accept credit or debit cards.

Also, for small retailers that want to cater to both online and physical shoppers, ecommerce platform Shopify's POS syncs customers and sales made online and in the retail location. 

My company, Financeit, lets small businesses offer monthly-payment plans for big-ticket items like high-end consumer goods and home improvement projects -- all from a mobile device.

3. Get on board with loyalty and rewards programs. Considering that a repeat customer has a higher lifetime value than a new customer, it pays to invest in customer loyalty. In the past, only big corporations had the resources to offer elaborate loyalty rewards programs, while mom-and-pop shops were left handing out paper punch cards, which would often end up lost in pockets, getting washed or trampled on.

Times have changed. Smaller merchants can now check out loyalty programs like FiveStars, Belly and Perka to create modern mobile loyalty and digital card programs at an affordable price. 

4. Turn to inexpensive tools for backend productivity. Traditional accounting and HR software used to be expensive and require technical infrastructure, but today, business owners can take advantage of easy-to-deploy cloud apps to run efficiently with their limited resources.

Startups have created useful tools that address specific needs, including FreshBooks or Wave Accounting for invoicing and accounting, Shifthub for workforce management and Intercom for customer care and user on-boarding. 

5. Take advantage of marketing and sales plug-ins.
By adding a simple plug-in app, small businesses can turn their basic Gmail service into something even more powerful. For instance, using Streak turns Gmail into a customer-relationship management tool, allowing businesses to track customers, active leads, deals and sales pipelines from the inbox. Other sales plug-ins include Rapportive, which provides detailed profiles on each contact, email-tracker Yesware and scheduling and reminder tool Boomerang.

These are just a sampling of the many apps that small businesses can use today to get ahead of their larger competitors. The bottom line is that small organizations no longer have to go it alone -- there's an app or technology out there for virtually any business need.

High-Tech Invader to Compete With Advisors

Charles Paikert for OnWallStreet.com writes:  Personal Capital is at the forefront of one of the advisory industry's hottest trends, using algorithms and account aggregation to offer advice and portfolio recommendations online.

Bill Harris, the firm's founder and CEO, is a Silicon Valley repeat performer, with stints leading both PayPal and Intuit. Two years ago, Harris set his sights on another market he saw as ripe for disruption: financial advice.

The Northern California RIA now has almost $200 million in assets under management and 700 clients, according to its latest Form ADV; Harris says 250,000 people use its free online tools. The firm has also raised more than $50 million from private investors. Financial Planning asked him for his take on wealth management.

Where is the industry headed?
It's ripe for change. It's such a huge market - an estimated $32 trillion in individually managed investable assets; that's twice the U.S. GDP. The investment management business today is bifurcated between self-directed do-it-yourselfers and those who are advised. The real opportunity is the blending of advice and information tools.

What's your pitch to investors?
We're in the midst of a transition from physical distribution of goods, services and information to virtual. The penetration of digital and mobile devices in affluent households is close to 90%. We're building a financial advice company from the ground up, offering virtual tools for a digital age

Do generational differences matter?
It's gone beyond a generation gap. Tech adoption skews young, but having money and financial complexity skews old. They balance each other out. One need not be a software programmer to manage life digitally.

So who's your target market?
Affluent households with complex finances who use technology in everyday life. Our minimum for managing assets is $100,000 and the sweet spot would be $200,000 to several million.

You plan to add 100 new advisors in two years. Where do they come in?
Clients will expect contact with an advisor by phone, online or on a screen. I think one of the opportunities will be co-browsing, when the advisor and client are looking at the same screen at the same time and discussing what they want to do.

How do you see the future of financial advice evolving? And how concerned are you about the competition?
I think it's inevitable that, over a five- to 10-year period, a very significant portion of investment management services will be delivered digitally and remotely. And I suspect many advisory practices will be doing the kinds of things we are trying to do today. That's fine. I encourage it. I don't see them as competition, but as comrades in arms.

Aside from Fees, What's the Best Way to Assess Financial Advisers?

The Experts for the Wall St. Journal write:  The price of a financial adviser can tell you only so much about his or her ability to manage your money.  With this issue in mind, we posed the following question to The Experts: Aside from fees, what's the best way for individuals to assess a potential financial adviser?
This discussion relates to the latest Wealth Management Report and formed the basis of a discussion on The Experts blog on Dec. 18.

 

Make Sure Your Financial Adviser Sees Risk as You Do

LARRY ZIMPLEMAN : First of all, you should conduct interviews to find the right financial adviser, just like you'd pick a doctor, dentist or any other professional. Fees matter but other things are also important.
Find out what qualifications the adviser has (certified financial consultant, chartered financial analysts, etc.). Ask how many years they've been in the business and ask for references (and check them!). However, the most important thing to evaluate is whether the adviser's view of risk and reward is identical to yours. If you are risk averse, make sure they share your point of view. If you believe in long-term, asset-allocation strategies, make sure they are in sync with that.
Finally, once you choose a financial adviser, make sure you review the results regularly and that the adviser is carrying out your intended strategy.
Larry D. Zimpleman is chairman, president and chief executive of Principal Financial Group.


 

Before Picking a Financial Adviser, Read This SEC Filing

MIKE PIPER : Read the adviser's Form ADV Part 2. This is a form that advisers must file with the Securities and Exchange Commission or with the state in which they are registered. It tells you all sorts of information about the adviser, written in plain English, with very little sales talk. "Just the facts," so to speak.
You can learn everything about the adviser''s compensation: Do they charge an hourly rate? A percentage fee based on assets under management? Commissions? Are the fees negotiable?
You can learn about the adviser's investment philosophy to check whether it matches with your own: Are they a buy-hold-and-rebalance investor? Or do they believe in shifting asset allocation as a part of a market timing (aka dynamic asset allocation, aka tactical asset allocation) strategy? Do they prefer low-cost index funds and ETFs? Or do they use actively managed funds in the hope of achieving outperformance? Or do they use individual stocks and bonds?
You can check whether the adviser offers services that are a good fit for your needs: Do they provide comprehensive financial planning? Or do they focus exclusively on portfolio management?If they do provide financial-planning services, can you purchase such services on an as-needed basis, or do you have to sign up for a continuing fee?
Often, if you have several advisers you're considering, checking each of their ADV Part 2 brochures will be a quick way to rule out some of the advisers and develop questions to ask the others when interviewing them.
To get a hold of an adviser's Form ADV Part 2 brochure, you can contact them and request it or, if you would prefer not to give the adviser your contact information, you can look up the firm's form on the SEC Investment Adviser Search website.
Mike Piper (@michaelrpiper) is a Missouri-licensed CPA and the author of the blog ObliviousInvestor.com. He is also the author of several personal-finance books, including his latest, "Social Security Made Simple."


 

The Key Questions to Ask Your Financial Adviser

CHARLES ROTBLUT : Beyond doing a background check (contact your state regulators, do a search on brokercheck.finra.org and adviserinfo.sec.gov, confirm credentials with the certifying organization, and then do a Google search on the adviser's name to see what comes up), talk to potential advisers about their management style. What type of investments do they personally favor? Do they like to be more aggressive or more conservative? How often can you expect to hear from them? Do they send out regular emails or newsletters? If you call with a question, will you realistically get to speak to them or will you be directed to assistants instead? How quickly can you expect a response under normal circumstances?
The greatest adviser in the world can be unsuitable for you if his or her personality and yours don't match. Every adviser has a certain approach to working with clients and every investor has different needs. This is why it is important to have a very open and candid discussion with an adviser you are considering. Talk about how often you want or don't want to be contacted. Discuss your investment style and whether you want to be aggressive or conservative. Bring up any investments you want to manage separately from the adviser and how much or how little input you want on it. Be very clear about what you want in the relationship and clearly state that you will fire an adviser whose approach differs from what he or she tells you.
It's better for both you and the adviser to identify differences in style before a formal relationship is established. A good adviser will be willing to give you the answers you don't want to hear. A bad adviser will smile and tell you what you want to hear even when he or she knows it isn't true. If you have doubts that the adviser is being sincere in answering your questions, walk away and find someone else.
Charles Rotblut (@charlesrotblut) is a vice president with the American Association of Individual Investors.


 

Boil Your Financial Plan Down to One Page

MANISHA THAKOR : To me, the greatest value that a financial adviser provides is helping you avoid costly missteps. The most effective way to do this is through the use of a clearly articulated written financial plan. Now, I'm not talking about an 80-page printout in a three-ring binder from some off-the-shelf financial software. I'm talking about a truly customized, short and actionable financial road map that you can refer to when making key financial decisions and/or when the markets are choppy. As such, I think the best way to assess a potential financial adviser is whether or not they provide this. (I am assuming you've already established that the adviser uses a fair and transparent fee structure and operates as a fiduciary versus under the suitability standard).

As an example of what I'm talking about, for each of my clients, I create a one-page summary where we visually depict where a client currently stands financially, where they ultimately want to go, and what specific action steps they need to take to get there. This document is supported by a Monte Carlo analysis to identify optimal savings rates if in the asset-accumulation stage or spending rates if in the asset drawdown stage and a written Investment Policy Statement clearly articulating an asset allocation and cash management strategy.
The benefit of an adviser who works in this manner is threefold:
This type of customized planning requires an adviser get to know you deeply (your goals, values, dreams, fears)
The presence of a written plan ensures you have a system of checks and balances for when your emotions might come into play (think: Did you blink in 2007-2009?)
This process moves the emphasis from trying to beat the market (which study after study shows is a loser's game) to truly meeting your life goals.
Manisha Thakor (@ManishaThakor) is founder and chief executive of Santa Fe, N.M.-based MoneyZen Wealth Management LLC.


 

An Adviser Needs to Be Good With Both People and Markets

TOM BRAKKE : It is important to find out where an adviser is on the spectrum between a "relationship person" and an "investment person."  Doubtless they have a combination of those skills, but few have the two attributes in approximate balance. Usually advisers for individuals skew toward the relationship end of the scale.
Understanding the capabilities of a prospective adviser will help you determine whether you are a match in terms of communications. But it will also let you see what expertise others in the adviser's organization will need to provide to help you reach your goals.
It is as frustrating dealing with an "investment person" who doesn't understand your relationship needs as it is working with a "relationship person" who doesn't have a depth of knowledge on investment matters. Therefore, it's important to find the right fit—and to not be afraid to get a second opinion every once in a while.
(For more on this topic, see the article I wrote for the CFA Institute in 2012.)
Tom Brakke, CFA (@researchpuzzler) is a consultant, writer and investment adviser who specializes in the analysis of investment decision making and the communication of investment ideas.

 

Be Wary of Financial Advisers Who Dismiss Index Funds

MATT HOUGAN : Make sure they have a fiduciary duty to act in your best interests. Then, ask them what they think about index funds. They don't have to be index-fund zealots, but if they think that active management still works in all areas of the markets, they are selling you a pile of goods.

Being charitable? Be tax-smart, too

Tom Herman for MarketWatch/WSJ writes: To give is divine. To err while giving is human.
For many donors eager to nail down tax deductions, contributing to charity can be as simple as writing a check. But tax laws often can be surprisingly tricky. While there are many tax-smart ways to donate, it can also be easy to make costly mistakes.

The mistakes run the gamut. Many thorny problems, for instance, stem from uncertainty over how to value gifts. Other donors stumble because they don’t pay attention to the fine print on such long-cherished techniques as giving stock to charity. And still others trip over paperwork issues, such as getting proper acknowledgment for gifts on a timely basis.
Many generous donors “have learned their lessons the hard and expensive way,” says Victoria Bjorklund, a charitable-giving consultant and a retired partner at the law firm Simpson Thacher & Bartlett LLP.

How can donors avoid these traps? It may help to keep in mind the following (seemingly) simple ideas—as well as a few common errors to avoid:

Give away your winners
This is an especially good year to consider giving securities that are worth far more than you paid for them. Stock prices this year have surged, and 2013 brought higher taxes for many investors.

This “could be a great strategy,” says Justin T. Miller, national wealth strategist at BNY Mellon Wealth Management’s office in San Francisco.
In a typical case, you give a qualified charity shares of publicly traded stock that have risen sharply in value and that you have owned for more than one year. You deduct the fair market value of the stock—and you don’t owe a capital-gains tax.
If you donate appreciated stock you’ve held for a year or less (considered “short term” gains), you generally can deduct only your cost “basis”—that is, your cost for tax purposes—not market value.

Don’t make the mistake of donating securities that are worth less than your tax cost. Instead, sell those losers, donate the proceeds to your favorite charity and use your capital losses to trim your taxes. Capital losses can offset capital gains on a dollar-for-dollar basis.
If losses exceed gains, deduct net capital losses of as much as $3,000 a year—$1,500 if married and filing separately from your spouse—from wages and other ordinary income. Carry over additional losses into future years.

Get it in writing
One common error is making a gift of $250 or more and neglecting to get an acknowledgment from the charity saying whether or not you received something in return, such as free tickets. Even if you didn’t get anything, make sure the charity says so—and gives you a description of any property you gave.
If you did get something in return, the acknowledgment typically must include a good-faith estimate of the value. Rules can vary depending on several factors, such as the size and type of your gift. See IRS Publication 526.
Don’t wait to get the receipt until you’re audited years later. You need “contemporaneous” receipts, Bjorklund says. Be sure to get a proper receipt by the date you file your return for the year you make the contribution—or the due date, including extensions, for filing the return—whichever is earlier.
“The IRS pays a lot of attention to substantiation requirements,” says Eileen Donahue, director of planned giving and senior philanthropic adviser at Yale University.
If you get something in return for a gift, you typically can deduct only the amount of your gift that exceeds the value of that benefit.

Nail down value
Problems can crop up with valuing donations of a wide variety of noncash items such as shares in a family business, real estate, conservation easements, paintings, antiques and many other items. “It is very easy to make major mistakes,” says Carolyn M. Osteen, a consultant to the Ropes & Gray LLP law firm and co-author with Martin Hall, a Ropes & Gray partner, of a book on tax aspects of charitable giving.
For instance, she says, “many donors make mistakes being overly aggressive on valuations.” That can lead to painful and expensive battles with the IRS.
Other donors stumble because they didn’t follow the rules on getting an expert appraisal from a qualified appraiser, Osteen says. There are strict rules on when you need an appraisal, what must be in it and the qualifications to be an appraiser. (See IRS Publication 561.)
The rules can be tricky even with donations of some household items. For example, you must include with your return “a qualified appraisal of any single item of clothing or any household item that is not in good used condition or better, that you donated after August 17, 2006, and for which you deduct more than $500,” the IRS says in Publication 561.
The bottom line: If you are making a significant gift requiring an appraisal, consider hiring a reliable tax pro to walk you through the fine print.

Tap your IRA
If you’re 70½ or older, you can transfer as much as $100,000 from an individual retirement account this year directly to qualified charities without having to include any of that in your income. The transfer will count toward your required minimum distribution.
You can’t deduct direct transfers from IRAs as charitable gifts, but this technique still can be very smart for many taxpayers. That’s because transfers aren’t considered income that would inflate your adjusted gross income and could lead to loss of key deductions and exemption amounts, as well as possibly subjecting you to higher taxes for other reasons.
“That’s a tremendous opportunity, especially for higher-income taxpayers,” says Miller of BNY Mellon Wealth Management. “A lot of our clients are taking advantage of that.”
But don’t procrastinate. The law allowing you to make these transfers is scheduled to expire at year end. Nobody knows whether Congress will extend this and dozens of other laws.
A few points to bear in mind: This is for IRAs, not 401(k) plans. It doesn’t apply if you are younger than 70½. Make sure you choose “qualified” charities. (For example, donor-advised funds don’t qualify under this technique.) And make sure the transfer goes directly to the charity.
“Many donors have found this opportunity a very attractive way to make gifts,” says Donahue of Yale University. “It’s unclear at this point whether this opportunity will still exist in 2014.”

Watch out for car trouble
Many charities would be delighted to take your unwanted cars, trucks and other types of vehicles.
But if you donate, say, a car worth more than $500 and the charity (or middleman) turns around and sells it, you typically can deduct only the sale proceeds—even if you think it was worth much more.
Here’s an example from the IRS: Suppose you donate a car you bought three years ago for $9,000. A used-car guide says the car is worth $6,000, but the charity sells it for only $2,900. Typically, you could donate only $2,900.
Even so, there are a few key exceptions that might enable you to deduct market value. Thus, consider shopping around before choosing a charity. For example, one exception would be if the charity makes “a significant intervening use” of your vehicle, such as using it to deliver meals to the poor.
If you use your car to help a charity, you typically can deduct your actual expenses (such as oil and gas costs directly related to getting to and from the place you volunteer) or use the standard rate of 14 cents a mile. But you can’t deduct the value of your time or services.

Look into donor-advised funds
Donor-advised funds are a convenient, simple and tax-efficient way to donate. You make your gift to the fund, and then you can suggest how the money should be distributed to your favorite causes either now or in future years.
But there are some key nuances that you should remember. You claim your deduction for the year in which you fund the account—even if you wait until future years to ask the fund to make grants. Don’t make the mistake of assuming that if you make a donation now, you must ask the fund to give away all that money this year in order to nail down your deduction for this year.
Naturally, donations must go only to qualified charities. For example, you can’t ask the funds to buy tickets for you or give money to your child.
There can be significant differences among funds. Before you sign up, make sure you check into such things as grant-making policies, the minimum size of grants and the minimum initial account size.