01 February 2011

3 Quick Tips for Documenting Noncash Charitable Donations

Sample 501(c)(3) receipt
Yesterday, I met with my tax man to look at my 2010 taxes and ask some proactive questions about my 2011 tax situation. He said that with a receipt from my 501(c)(3) organization and my list of noncash items stapled to the Salvation Army Value Guide, I had proper documentation to deduct $1013 on my 2011 taxes. In the meantime...

I had a list for my 2010 donation, but it wasn't nearly as detailed (because it was a LOT more stuff, and at the time, I just wanted it gone). I listed things like "Ladies' Clothing - 1 bag," "Men's shoes - 1 bag," "Box of books - 3." He estimated it to be a $2395 deduction. It seemed like a high number to me, but since we moved during the same tax year, it will be more "acceptable" to the IRS.  

If you plan to use charitable donations as tax deductions, there are three things you need to know incase you are audited later.

1.  Keep your itemized list, and maybe even a photo of the lot. You don't need to mail your list to the IRS,  but do save it for the recommended seven years.

2. A little trick, especially if you are doing your own taxes: don't use even numbers. If you estimate your donation to be worth $500, it might be a red flag for an audit, but $508 or $496 is more realistic.

3. If your total is over $250, you need to fill out Form 8283. Most tax services charge you based on the number of forms they submit for you. Make sure it is worth it before you agree to use your donation as a deduction. My accountant will flag situations like this and give me the option; if yours doesn't, find a new accountant ~ an honest one.

Giving to charity is definitely "giving that gives back." Find a cause you can get behind, take them your unloved (but still in good to excellent condition) items. They'll turn it to good (like food for the hungry) and you get a discount from the IRS! It's a win-win situation. ~ Plain & Simple As That

If you like this post, you may also enjoy:
How I Made Money From My Unwanted Stuff
Donate or Sell: How To Decide

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