Looking over my projected tax return, it seems my husband and I cannot itemize our deductions. The interest rate on our mortgage is so low that we no longer have enough interest to take Schedule A over the standard deduction for married couples. I’m now looking for other options for my charitable tax deduction. Do you find yourself in the same situation?
What can we do with our charitable contributions? We have lots of clothing, small appliances, electronics, and more to turn over to my favorite charity.
Instead, let’s give them all to a friend—who can itemize! We’ll still get those things out of our house, and we won’t have to make all the neat, detailed lists of what was donated.
Making a list and checking it twice
What lists? When donating more than $500 worth of stuff to charity, you must provide details. Your list needs to include: what is donated; how many units of it (how many pairs of shoes, for example); what it cost you originally (approximately); and its value when making the donation (also approximately). Look at Form 8283, at the bottom of Part I—you’ll find a grid with the data needed for your tax return.
What if you don’t have the original cost or current value?
No sweat! You can use the Salvation Army site, which provides “thrift shop values.” You also can take advantage of better, free tools from TurboTax ( – ItsDeductible.com) and H&R Block (DeductionPro). These sites have databases that contain cost information and current, allowable market values. Simply make a list of what you will be donating, print out the resulting reports, and enter the summary data into your Form 8283. Note that you can also have these sites import the data directly into your tax return for you if you prefer.
Good condition is mandatory
In order to claim deductions, the things you donate must be in good condition. It’s the law. How can you prove this? Take photos. Everyone seems to have digital cameras or phones that take photos. Use them. Save the digital photos into a folder with your tax data, or print the pictures and put them in your tax file. No need to send them in to the IRS.
Plan your donations
Some people manage to gather so many things to donate each year that their non-cash deductions total thousands of dollars. When your total non-cash donations for the year reach $5,000, you need a written appraisal to be able to claim them.
How can you possibly get such an appraisal in December, when you’ve been donating all through the year? You can’t. That’s why it’s important to plan out your donations. When you know your things are going to be worth a lot of money, save them up. Get them appraised. And donate only once—at the end of the year.
If you’re selling your home, you know you’ll probably have a lot to clean out and donate. When someone dies or moves into a care facility, you know you will be donating, essentially, the entire contents of that person’s household. For such a large donation, it’s worth getting it all appraised and summarized before moving forward.
Sell!
Incidentally, if your stuff is really worth all that much, have you ever thought of selling it? Perhaps you can turn it over to an estate agent or garage sale specialist. You can always donate the proceeds. There’s a lot less paperwork involved.
And no, you won’t have to pay taxes on the sale of your stuff. Just report it on Schedule D with the same cost as the sale price. Undoubtedly, you are selling these things for less than you paid for them.
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama