Happy New Year! Welcome 2012 with motivation and focus to enjoy life and change up anything that bothered you in 2011 (emotionally draining friends/family, anyone?)
If you are like most Americans, you wait until the week after Christmas to make any donations (monetarily or physically) to get that tax deduction before the end of the year. Goodwill was a madhouse last week!
So if you scrambled to make those last minute 2011 donations, keep these points in mind:
- Make sure that you donated to an IRS-qualified, tax-exempt 501(c)3 nonprofit. To verify a charity’s status, check IRS Publication 78 at irs.gov. (Publication 78)
- What is not deductible: payments to individuals, & donations to organizations that are not classified as above
- Charitable contributions are only valuable from a tax standpoint if they exceed the standard deduction (along with other itemized deductions such as home mortgage interest). 2011 standard deduction = $5,800 for most singles and $11,600 for most married couples
- The IRS allows you to deduct the “fair market value” of your goods. In other words, what it would sell for today (like at a thrift store). Goodwill has a valuation guide to give a rundown of price ranges for many items (Donation Guide)
- Your stuff must be in good condition in order to take a tax write off. Don’t call Salvation Army to come haul off a 1920 couch with holes and stains.
- Show proof of donations. For goods totaling less than $250, ask the charity for an itemized receipt. For goods worth $250-$500, you will need an itemized receipt and written acknowledgment of your donation from the charity. Anything worth $500-$5,000, requires an itemized receipt, written acknowledgment, plus detailed records of how and when you got the items.
And if all else fails, contact your accountant with any questions that you may have about those donations & deductions!