Abbott Pratt Tax Talks: Non-Cash Charitable Contributions
Going through the rooms of our house for our family’s upcoming move, my wife and I were constantly debating whether or not we would keep or purge our accrued belongings. Instead of cramming the household items into bags and tossing them out with the trash, we knew our valuable, yet slightly used items could possibly be useful to someone else. With this in mind, we packed up the cars and headed to our local Goodwill to make a drop off. Not only were we benefiting those who could reuse these items, BUT we will also be getting a tax deduction when we complete our tax returns this year. The next time you find yourself in a similar situation, debating whether or not to keep your unused items, keep these tips for deducting non-cash contributions in mind:
- You can deduct the fair market value of property you donate to a qualified organization
- If the value of the donated property is $250 or less you will need a receipt from the charity
- If the value of the property is greater than $250 but less than $500 you will need to obtain a contemporaneous written acknowledgement. (This is similar to a receipt, but contains a few additional must haves for substantiation to the IRS).
- If the value of the donated property is in excess of $500 additional filing requirements are needed along with the contemporaneous written acknowledgement
- If the value of the donated property is in excess of $5,000 you will also need a qualified appraisal to go along with the additional filing requirements
- For non-cash items such as automobiles, inventory or investments, additional tax considerations and documentation should be discussed and obtained as there are additional tax guidelines that need to be followed
So, whether you are moving or doing a spring or holiday cleaning, take a second to think if you should throw away those household items. Consider donating to a qualified organization, and you’ll find some great tax savings as a result of your charity!