December 11th, 2016 12:32 PM by Jackie A. Graves, President
The month of December isn’t just about holiday shopping and preparing
to sit through 24 hours straight of “A Christmas Story.” It’s also the season
for decluttering and donating those unwanted household items by Dec. 31—at
least if you want to take a tax deduction for the year.
But donating your mother’s antique vase isn’t as simple as
boxing it up and dropping it off at Goodwill. If you want the maximum tax
break—along with the warm fuzzies that come with doing a good deed—avoid making
these mistakes that could send the IRS knocking on your door.
This is the period when you’re a lot more likely to make
blunders, says George
Cook, a consumer expert and marketing professor at Wilmington
College in Wilmington, OH.
“People wait until the very end of the year, then they rush and
make mistakes,” Cook says.
So before you head to your nearest donation center, make sure
you don’t fall victim to any of these common pitfalls
It’s not that the IRS doesn’t trust you, but it doesn’t trust
you. That’s why you must get a receipt when you donate household goods. If the
value is less than $250, all you need is a receipt with the charity’s name and
what and when you donated.
But if you donate property worth more than $250, you’ll need a
document that itemizes the donations, their fair market value—and that’s a
bit of a crapshoot—and whether you received anything in return for the donation
(such as a tote bag). For donations more than $5,000, you also need an
The IRS loves records—the more the better. When it comes to
donating property, it’s a good idea to keep detailed records of anything you
donate that’s worth $50 or more, Cook says.
“I write the description, the condition, the estimated new cost,
and the estimated value,” he says.
You could even go the extra mile and take photos of all your
donated items. That way, you have proof if questions arise. Attach descriptions
to receipts and place them in your tax file, so they will be handy when
you fill out your tax return and, God forbid, ever get audited.
Trying to figure out how much an item is worth is the hardest
part of getting a tax break from your philanthropy. The IRS has pages and pages on how to value your
property that boil down to this: “If you contribute property to a qualified
organization, the amount of your charitable contribution is generally the fair
market value of the property at the time of the contribution.” OK…
What’s the fair market value of used property? In a nutshell,
think about what you’d pay to own that sofa you’re donating. If it’s in
such bad shape that you’d never place it in your home, it’s not worth anything
in the way of a tax deduction (and maybe you want to reconsider donating it and
instead send it to the trash). But if you’re getting rid of a perfectly lovely couch because your tastes have changed from
French country to contemporary, then you can justify deducting what
someone might pay for that used piece of furniture.
The Salvation Army makes valuing your stuff easy with its Donation Value Guide, a list of typical
donations and their price ranges. A working color TV, for instance, is valued
at $75 to $225, while a sofa ranges from $35 to $200.
There are other ways to do it, too. Cook searches eBay to help
determine the value of things he’s donating.
“I print out two or three scenarios as the basis for what I set
for the valuation. If I ever get audited, I can show the IRS this is how I
based my valuation,” he says.
If you want a tax break, you have to donate to a “qualified”
organization, not just anybody with a logo and truck.
Other than churches and governments, most organizations must
apply to the IRS to officially become a qualified organization. There are
many categories of organizations that fit this description, but generally
they must operate for the sole purpose of helping other beings (some animal
groups qualify) and groups. You can check the group by running its name through
the IRS Exempt Organizations Select Check tool.
Dec. 31, baby. If you want to deduct the contribution on your
upcoming tax return, you must make the donation by at least the last minute of
the last day of the previous year.
Don’t race the clock and hope that the donation truck you
scheduled for Dec. 31 shows up. Whenever you declutter your home, start the
process then. Keep boxes handy so it’s easy to throw something in the donate
If you can’t get it together by Dec. 31, no worries. You can
take deductions on next year’s return.
There are many, many charities out there with lots of different
goals. Here are some of the charities people most commonly donate household
items to, but you can also search for one that aligns with your values and
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