Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.
Wednesday, November 23, 2016
A YEAR END TAX TIP – BE CHARITABLE!
prepare your home for the holidays now is a good time to clean out your
closets, attic, or garage and donate what you no longer want or need that is
still in good condition to a church or charity and get a 2016 tax deduction.
claim a deduction for the “fair market value” of used appliances, books,
clothing, computer hardware and software, electronics, furniture, household
items, toys, videos, etc., etc. donated to a qualifying church or charity.According to the IRS, fair market value is
the price a “willing, knowledgeable buyer
would pay a willing, knowledgeable seller when neither has to buy or sell.”
You are responsible for determining
the fair market value of the items you are donating.The charity to which you make the donation is not required to provide
you with a value.
Make and keep a detailed listing of
what you are donating with the condition and value of each set of items (i.e. 6 pairs of men’s pants, good
condition, $60.00, 5 pairs of men’s shoes, good condition, $75.00).You may want to attach a copy of the listing
to your 2016 Form 1040.
You cannot deduct the contribution of a
used item of clothing or household item unless the item is in at least
"good" condition.Donations of
clothing and household items with a minimal monetary value, such as used socks
or underwear, are also not
new items of food, toys, clothing, etc. you may donate to a church or charity
for Thanksgiving food drives or holiday campaigns like “Toys for Tots”?You can deduct the actual cost of the items
donated.You should make a separate purchase of the items you will donate – don’t group
together with the purchase of personal use items – and save the store receipt.
total amount donated to a church or charity is more than $250.00 you must
have a “contemporaneous” written acknowledgement from the organization with its
name and address, the date of the contribution, and a brief description of the
item(s) donated (used clothes, toys, used furniture, etc).
To be able
to claim a deduction for the full amount of your contribution the acknowledgement
(any acknowledgement of any
contribution more than $250.00, whether cash or non-cash) must also indicate the statement “no goods or services were
provided in exchange for the donation”, and must be received before the earlier of the date the original tax
return is filed or the extended due date of the tax return.
Obviously this is only a tax benefit if you are able
to itemize on Schedule A.Be aware
that the Standard Deduction amounts for 2016 are –
·Single and Married Filing Separate = $6,300
·Married Filing Joint and Qualifying
Widow(er) = $12,600
·Head of Household = $9,300
this holiday season – but give wisely and keep good records of your giving.