How do you take a deduction for a charitable contribution without writing a check or pulling out your wallet? The answer lies in non-cash donations. See below for some ideas.
Clothing and household items: You can contribute clothing and other property in good condition to a charitable organization and claim as an itemized deduction. You may only deduct the fair market value of an item, which in most cases is the amount it would sell for in a thrift shop. Both Goodwill and Salvation Army publish lists that can be used as a guide. Keep a record of items donated along with the name of the charitable organization, the date and place of the donation, fair market value of the items, the method of valuation, and approximate cost of the property. Non-cash donations of over $500 in total value are listed on form 8283. If you’re cleaning out your house or downsizing this can add up to a nice deduction!
Artwork, Antiques, Coins: These hard to sell collectibles can be a nice gift for a charity with the added benefit of a deduction for you, but are subject to specific rules, so do your homework before making the contribution. Higher value items will require a written appraisal from a qualified appraiser.
Stock: Appreciated stock may also be donated to charity if it meets certain requirements. The stock can be deducted at fair market value. This means that a deduction for the full fair market value may be allowed even though the appreciation was never reported or taxed as income.
Mileage: You may take a deduction for the miles you drove when doing work for a charity. In 2015, the charitable mileage rate was 14 cents per mile. Keep a notepad in your glove box and jot it down during the year or keep track of it on your smart phone.
Please note: Charitable contributions are deductible only if you itemize (with the exception of Qualified Charitable Distributions from an IRA - see last week’s Tax Tip for more). Deductions for charitable contributions are also limited by adjusted gross income, but may be carried forward for up to five years. It’s important to keep the required paperwork supporting the deduction. Details available in IRS Publication 561- Determining the Value of Donated Property and IRS Publication 1771- Charitable Contributions: Substantiation and Disclosure Requirements.
This information is for general and educational use only and not intended as tax or legal advice. Tax situations vary significantly from person to person so it's always best to consult your own professional preparer for deductions that may apply to you.