Search This Blog

2.13.2016

Financial Tip of the Month: Tracking Donations for Tax Purposes

by this time of the year, a lot of people have a good amount of donations to drop off.  after the influx of things at christmas, a lot of people clear out the older items.  and after the start of the new year, even more people adopt some sort of cleaning resolution that often involves decluttering.  donating these items to people (or animals!) in need is a wonderful thing on it's own, but hopefully you know there's another side benefit to your kindness - a tax write off.  yes, your donations are tax deductible.


first up, know what you can donate: clothes (including shoes and accessories), books and movies, small furniture like lamps or side tables, toys and games, kitchen items and other household items (vases, picture frames), tools, sports equipment, and computers and electronics.  you can also donate linens, but i recommend those go straight to your local shelter, of course!

what can't you donate?  big appliances, car parts, anything broken, mattresses, weapons - you know the drill.  if you're not comfortable gifting it to a friend, it's not appropriate for donation either.

now, the tax part - the donation limit is 50% of your income.  say you make $40,000 a year.  your donation limit, the amount you can claim your items are worth, is $20,000.  it's unlikely to effect you when you're just donating some clothes and dishes.  in order to get this tax deduction, you have to itemize.  your tax guy will tell you if that's a good idea for you or not.  the standard deduction is somewhere around $6,000 if you're single and $12,000 if you're married, so if you're deducting more than that (say, student loan repayment, plus donations, plus credits for buying energy efficient household appliances, all those good things) you'll want to itemize and get your taxes as low as possible.  i itemize.  i want every single damn dollar.

so how do you decide what your items are worth?  that's the easy part - there's a ton of lists for you.   the salvation army and goodwill each have their own guide.  personally, i donate to the salvation army.  here in chicago, they have a truck that drives around and you can schedule it to pick up your donation (of any size) and they will leave you a receipt for your records.  it's still on you to determine the value of course - they just pick up your bags and go.  you can also try using turbo tax's it’s deductible, which is a bit higher in price for each item and takes a little longer to set up, but it saves all your info for the entire year to your account (and it's free.)

there are a few other donation tracking tools worth mentioning too, if the turbo tax one isn't your style.  online, try the goodwill donation receipt builder.  if you're a pen and paper fan and maybe want to take photos of what you donated for your records, try out iheartorganizing's donation tracker printable.  both are free too, of course.

when the world is making it this easy for you, there's no reason not to donate your old items.  and get a tax break while you do.

No comments:

Post a Comment

Copyright @ Not Entirely Perfect. Blog Design by KotrynaBassDesign