It’s the final day of the year, and many of us still can take one quick tax action before the famous crystal ball drops in Times Square – or actually an hour later here in the Midwest time zone!
Make a cash donation; contribute unneeded clothing, etc. to a favorite charity. After all, it is the season of giving!
If you can mail a check, send an electronic donation or deliver used – but still useful – stuff to your local charity before the stroke of midnight, you can deduct the value of that giving on your 2015 tax return.
The key to deducting is fair market value, Eric notes. Cash and credit card donations are obvious. You can take the dollar amount given.
Clothing and other goods are valued in current condition – not at the price tag when purchased new. The Internal Revenue Service reminds us that household items and apparel must be in “good, used condition” to be acceptable.
There are ways to figure out reasonable value. For example, even sales of comparable items listed online at Ebay can verify current market value; don’t forget to print off that proof. Just about any acceptable donation can be valued at 10 percent of the original cost, we at EricJohn Ltd. suggest.
Here are a few details about deducting charitable gifts:
- Eligible charities: The IRS maintains a database called “Select check” at https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check . In addition, churches and government agencies that are not shown also qualify.
- Money donations: A cancelled check or credit card statement with the name of the charity proves donations up to $249. IRS wants an acknowledgment from the charity from $250 up.
- Household items: The charity’s statement is required for donations starting at $250. It’s best to get some type of acknowledgment slip for any donation. But, especially, if dropped at an unattended site, make sure to have a written record of the items and their values. Also, Eric suggests taking a cell phone photo of items donated as a back-up. You probably won’t be donating items over $500 at this late date, so contact Eric in 2016 for direction on those large gifts.
- Charity mileage: You can deduct 23 cents a mile for driving donations to a charity’s store/drop-off site.
Finally, many, but not all, taxpayers can deduct charitable giving. Those who expect to use the standard 1040 will take donations as part of a group of deductions on Schedule A. Those who expect to file short forms 1040A and 1040EZ might or might not benefit from donations.
You’ll find a summary of IRS charitable giving rules at https://www.irs.gov/Credits-&-Deductions/Individuals/Deducting-Charitable-Contributions .
Whether or not you make a last-day donation, Happy New Year and best wishes for 2016 from EricJohn Ltd.!