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Back up deduction for used computer

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in Small Business Tax,Small Business Tax Deduction Strategies

Are you upgrading your computer soon? Don’t simply toss the old one in the trash when it no longer meets your needs.

Strategy: Donate the PC to charity. Usually, you can deduct the full fair market value (FMV) of the computer. As a result, you’ll get a tax deduction for property you were going to discard.

Keep detailed records as proof in case the IRS ever calls you on the carpet.

Here’s the whole story: Generally, you can claim deductions for used personal property that you donate to a qualified charitable organization. The deduction amount for property that has depreciated in value—such as a computer—is equal to its FMV on the date of the donation.

Here are three key tax rules to observe for donations of property.

1. Obtain a receipt for each contribution made to charity. The receipt should include the name of the donation, the date and location of the contribution and a detailed description of the property (to the extent it’s possible).

2. When you file your tax return, complete Schedule A, Form 8283, Noncash Charitable Contributions, for property (other than certain securities) valued at more than $500.

3. For contributions valued at more than $5,000, fill out Schedule B, Form 8283 and attach a written appraisal of the property’s value.

Tip: The charitable appraisal itself is deductible as a miscellaneous expense subject to the usual 2%-of-AGI deduction threshold.

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