Is it time for “spring cleaning” around your home? Don’t be so quick to discard old furniture, used clothing and toys and games that have fallen out of favor. Instead, donate those items to a local charity.
Your tax reward: A deduction based on the fair market value (FMV) of the property.
Advice: New rules apply to certain donations made after Aug. 17, 2006. Under the Pension Protection Act of 2006, you can’t claim a deduction unless donated used clothes and household items are in good condition.
What qualifies as “good condition”? The new law doesn’t specify, so you have a little leeway if you follow the charity’s guidelines.
Make sure you carefully document all your contributions. Spell out any special circumstances (e.g., donations of items never used). Finally, obtain a receipt for your donations from the charity. You will need this as proof when you file your tax return.
Tip: Get an appraisal for high-priced items. Under a special exception in the new law, you can claim a deduction for a single item appraised at more than $500, even if it’s not necessarily in good condition.
- Small Business Tax Deduction Strategies No matches