Caring Transitions' January 2017 Newsletter
Tax Time: Charitable Contributions and Deductions
According to the Giving
Institute, Americans exceeded records by donating $373.25 billion in
donations in 2015. Individual donations
accounted for more than 70% of that total, with the remainder spread across
estate, foundation and corporate donations. It is anticipated 2016 will be
another record breaking year.
If you are moving, downsizing or decluttering
this year, you may have an opportunity to demonstrate your altruistic side and
donate unwanted items to charity. And while most donations are done selflessly,
charitable deductions can be a big plus come tax season. To help with your 2016
tax filing and to help you receive the full benefit of your donations in 2017,
we have put together a short list of items to consider.
First, be sure your donation is being made to a
qualified organization. You can investigate an organization’s qualifications by
asking the organization itself, by contacting the IRS at 1-877-829-5500, or
going to the IRS
eligibility web page. For
more information regarding qualified and non-qualified parties, such as
specific individuals and certain organizations, refer to IRS Publication 526.
Most basic deductions can be
completed using Form 1040 and completing a Schedule A for itemized deductions. IRS Publication 561 has
more information about the value of deductions. To download tax forms and
publications, visit www.irs.gov/formspubs
or call 1-800-TAXFORM (18008293676).
Clothing and household items
must generally be in “good” used condition or better to be deductible. Non-cash donations such as these also need to
be itemized. Goodwill and the Salvation
provide information regarding deductions on their websites and also a value
calculator to help you determine the value of household goods
Tax Forms Form 8283 is used to report
information about non-cash charitable contributions over $500.
Donations of property, stock,
or other non-cash items are usually valued at the fair market value of the
property. Fair market value is generally the price at which property would
change hands between a willing buyer and a willing seller. If you give
property to a qualified organization, you generally can deduct the fair market
value of the property at the time of the contribution.
rules apply to vehicle donations. The fair market value of vehicles such as
cars, planes, and boats, must be determined. There are limits on whether or not
you can deduct the full value, depending on how the vehicle will be used or
distributed by the charitable organization. For cars worth less than $5,000, use the Kelley
Blue Book, the Hearst
Black Book, or a guide from the National
Auto Dealers Association (NADA) to determine the market value.
deduct contributions of cash, check or other monetary gifts, maintain a bank
record or written confirmation from the organization. To claim a deduction for
contributions of cash or property equaling $250 or more you must have a written
acknowledgment from the qualified organization. This confirmation or receipt must
contain the name of the organization, the date of the contribution and amount
of the contribution. For text message donations, a telephone bill will meet the
record-keeping requirement if it shows the name of the receiving organization,
the date of the contribution, and the amount given.
Many times our clients look to use
for advice on whether they should donate items or sell them. Ultimately, whether you choose to donate or resell your items depends on
the volume of what you have, the value of what you have and the time required
to liquidate it. In most cases, the tax deduction you get from donating is less
than the net cash you would get from selling items, but donating may be a
faster solution and also helps you feel good about the final disposition of the
it’s time to make decisions about your own personal property, or that of a
loved one, contact the experts at Caring
Transitions for a free consultation before
you begin to remove items from the home. We will help identify the overall
value of goods as well as understand the process and time required to sell/donate.
As the nation’s most trusted liquidation
resource, Caring Transitions offers more than estate sales. Our insured,
secure, and certified staff has multiple resale and donation options and will
present the ideal solution to meet your needs.
online tax filing sources include tools to determine FMV, deduction
qualifications, and more. Consult with your local tax professional to determine
what’s best for you.
Written By Nan Hayes for Caring Transitions®
©Caring Transitions 2017
no reprint in part or entirety without express permission.