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  • question on donation deductions

    -Arkansas-

    My husband and I are newly married and we're both students and we make very little money together per year with only him having a part-time job. I was thinking of taking about $100-200 worth of items to the goodwill for a tax deduction instead of going through the trouble of having a rummage sale. I don't know how it works. I've had some people tell me that you need to have a significant amount before it will even affect your taxes. Can anyone tell me if it will be worth it or should I even bother?

  • #2
    Charitable donations are deductible only if you itemize deductions on the Schedule A, instead of using the standard deduction.
    Most people do not have enough deductions to qualify for Schedule A unless they are purchasing a home and can deduct mortgage interest and real estate taxes, or have a large amount of medical expenses.

    However, when making charitable donations, it is always a good idea to get the receipt for tax purposes, because people's situations sometimes change during a year. When donating items, first make sure that it is a qualified organization--places such as Goodwill and Salvation Army are qualified, and there is a long list of others.
    Secondly, the person making the donation must keep a list of the items in the event of an audit. Count all of the items, such as 20 pair of pants, 6 shirts, 1 pr boots, a toaster, 3 blankets, etc. The value of the items is then determined by a list provided by the IRS.

    Any charitable donations in excess of $250 require a receipt, and any in excess of $500 require Form 8283.
    "What would a reasonable person do?"

    aryels
    A.S. Paralegal
    Criminal Justice Student--B.S.

    "Give this guy 15 cents and tell him to go to hell."

    Comment


    • #3
      If you donate, get a donation receipt. But as a practical matter, I doubt that you all will have enough to where itemizing would be more advantageous than taking the standard deductions.

      Comment


      • #4
        Originally posted by aryels
        Charitable donations are deductible only if you itemize deductions on the Schedule A, instead of using the standard deduction.
        Most people do not have enough deductions to qualify for Schedule A unless they are purchasing a home and can deduct mortgage interest and real estate taxes, or have a large amount of medical expenses.

        However, when making charitable donations, it is always a good idea to get the receipt for tax purposes, because people's situations sometimes change during a year. When donating items, first make sure that it is a qualified organization--places such as Goodwill and Salvation Army are qualified, and there is a long list of others.
        Secondly, the person making the donation must keep a list of the items in the event of an audit. Count all of the items, such as 20 pair of pants, 6 shirts, 1 pr boots, a toaster, 3 blankets, etc. The value of the items is then determined by a list provided by the IRS.
        Any charitable donations in excess of $250 require a receipt, and any in excess of $500 require Form 8283.
        [ I have a car that is wrecked and won't drive , but has good parts. I was considering donating it to the salvation army for charity, but I don't know how ,exactly, tax deduction effects me. Will it effect my tax return check in a positive way? I will be getting money back, will I get more?
        For strictly financial reasons would I be better off selling it part by part through the paper for money ? If it won't help me to donate it, I would just as soon sell it instead. I live in Oklahoma and it's an early 90's ford taurus, it's not worth fixing. I need general info about how tax deductions benefit the doner. Please respond thoroughly as I am tax law illiterate. :/
        ...and as sure as my words are pure I praise the day tht brings you pain.

        Comment


        • #5
          Originally posted by Hecubus
          [ I have a car that is wrecked and won't drive , but has good parts. I was considering donating it to the salvation army for charity, but I don't know how ,exactly, tax deduction effects me. Will it effect my tax return check in a positive way? I will be getting money back, will I get more?
          :/
          The rules concerning charitable contributions of automobiles are slightly different. And you must itemize deductions to be able to claim the charitable contribution.

          First, you must determine the FMV (fair market value) of the vehicle, possibly different than it's bluebook value. You must document the donation and the FMV. If the FMV of the vehicle is more than $250, you must obtain written verification of the donation.

          You must also determine if the recipient organization intends to sell the vehicle or to use it for company purposes. If the organization improves and uses the vehicle, it must provide you with documentation within 30 days, and you may deduct the FMV.

          If the organization sells the car, you must obtain a receipt stating the amount received by the sale. The organization is required to provide documentation within 30 days of the sale. According to the American Jobs Creation Act 2004, if the recipient organization sells the car for $500 or more, you are able to deduct only the amount of proceeds of the sale.

          see IRS Pub 526; IRS Tax Tip 2005-58; IR-2004-142
          "What would a reasonable person do?"

          aryels
          A.S. Paralegal
          Criminal Justice Student--B.S.

          "Give this guy 15 cents and tell him to go to hell."

          Comment

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