Significant tax savings can be achieved through a properly planned program of gifts to charity. Although a contribution may be motivated by humanitarian reasons, it is nevertheless wise to take the tax considerations into account when making a contribution.
Non-cash contributions present a unique set of tax saving opportunities for old items sitting in your home that you are not going to use. As we approach the end of 2017 you have an opportunity to donate your unused clothing and household items to 501(c) 3 tax exempt organizations. Such organizations include Goodwill Industries and Salvation Army but there are many in your area. There are also the GreenDrop Centers who provide a convenient way to donate gently clothing and household goods which benefits various charities.
When you donate the non-cash items to a tax exempt organization you will need to keep records of the donation. Usually the organization will give you a receipt with the following information to substantiate the donation:
- Name of charitable organization.
- Date and location of the contribution.
- Reasonably detailed description of the contributed property.
- Fair market value and method of valuing the property. The charitable organizations usually have charts available to determine the fair market value. An example is on the Salvation Army website.
- Cost or other basis of the property.
To receive the deduction for 2017 (if you itemize deductions) you will need to make the contribution by December 31, 2017. You should not wait until the last few days of 2017 to make the donation, from our experience the charitable organizations are usually overwhelmed with donations and stop accepting them as the year end approaches. (can’t accept all of the donations as we approach December 31st.)
A deduction is not allowed for the value of services contributed to the charitable organization. However, if you are active in such organizations, you should be aware that out-of-pocket expenses incurred while performing volunteer services are deductible as a charitable contribution. If you use your auto, you may also be able to deduct the standard mileage allowance of 14 cents per mile.
If you have any questions regarding non-cash donations please contact us.