Cleaning out your closets/attics can save on your tax dollars. That is if you donate those coats and sweaters that seem to squeeze you tighter than last year to a non profit organization. Those jeans, suits and dresses that seem to have shrunk. Don’t forget about the shoes that are collecting dust, because they were purchased to match that one outfit. Now, this is that one outfit that don’t quite fit same. Rather it fit or not, in or out of fashion, generous giving is a noble act of kindness.
The IRS allows you to deduct the fair market value of clothing, shoes, household goods and more. Charities such as the Salvation Army and Goodwill offer value guides to help you determine fair market value of items you donate. It’s important to get a receipt as a record of your contribution. The receipt should include the name of the charity, the value of item(s) donated and the date of your donation. If your donation exceeds $500, you will need to complete Form 8283 and file it with your tax return.
There’s also a limit on how much you can deduct. The basic rule is that your contributions to public charities, colleges and religious groups can’t exceed 50 percent of your Adjusted Gross Income (AGI). The caps are a bit lower for gifts to other types of nonprofits. When it comes to gifts of appreciated property, the limit drops to 30 percent of AGI. If these restrictions limit your write-off in the year of the gift, the excess deduction carries over to the next year.
For more information of charitable contribution contact your Eagle Eye Tax Solutions office.