Yes, I know I just posted about charitable giving on Boxing Day. And not to run this charitable donation thing into the ground, but 'tis the season of giving.
Plus, I'm spending the afternoon philanthropically multitasking.
I'm sorting through my big bag of old clothes, deciding which ones can go to Goodwill by Dec. 31 and noting their fair-market value for my Schedule A tax deduction claim.
I'm doing this tax task while half-watching my Dallas Cowboys muddle through another game and trying to maintain some charitable thoughts about my life-long NFL team.
I suspect the clothing donation triage will turn out to be more fulfilling.
Clearing your closets of good stuff: In addition to feeling good about helping others and ultimately getting a tax break, I also get a lot of stuff out of my closets. This includes apparel that I haven't worn in years, as well as some things that I've worn out.
Shirts and slacks and the stray dress that fall into that latter category generally don't make the donation cut.
Internal Revenue Service rules say that gifts of used household goods, whether clothing or household items, must be in good or better shape in order to be acceptable deductible donations. Basically, the IRS spells out what we all should know: the charity bin is not a trash bin.
What are they worth? Once you cull the items that are worth giving to others, you must decide what they're worth as far as your itemized tax deduction claim.
The general rule is that you use the donated item's fair market value on the date of the contribution. That's what a willing buyer will pay for the item now, in its current good or better condition. Not what you paid for it originally.
The IRS offers some guidance in determining the value of donated goods in Publication 561. A good example is garage or yard sale pricing.
You also can check out local thrift or consignment shops to get an idea of what similar items are selling for nowadays.
More unusual ways to give: In addition to the usual year-end cash contributions and donations of clothing and household items, you can cash in on uncommon charitable gifts.
Details are provided in this week's Weekly Tax Tip. It's actually scheduled to run over at Bankrate.com on Dec. 30, but since time for giving for the 2015 tax year is rapidly dwindling, I wanted to give my loyal readers a head start.
Among the atypical ways to give and get a tax break are:
- Donate a car,
- Count the miles you drive for a charity,
- House a student who's not a relative or dependent,
- Donate appreciated long-term assets,
- Total out-of-pocket expenses paid in service to a nonprofit,
- Help Uncle Sam pay down his debt, and
- Directly donate an IRA's required minimum distribution.
Don't miss the deduction deadline: As with all tax deductible donations, you also need to make these more uncommon ones by Dec. 31 in order to claim them on this year's taxes.
So if you're interested in giving stock to a charity or rolling your RMD to your favorite nonprofit, you might want to get that process going Monday.
If you happen to let it slip and don't get the goods to your charity in the few days, don't worry. Go ahead and donate early in the New Year and that gives you a head start on your 2016 deductible donations.
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