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Spring cleaning? Dust off charitable gifts

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in Small Business Tax,Small Business Tax Deduction Strategies

If you’re starting your annual spring cleaning soon, don’t toss out items such as used clothing, toys and furniture.

Strategy: Donate them to charity instead. That way, you’re entitled to a deduction based on the fair market value (FMV) of the property.

But remember that no deduction is allowed unless the items are in good condition.

What is considered to be “good condition” for this purpose? The tax law doesn’t specify. So donors have a little leeway if you follow the charity’s guidelines.  

Make sure that all contributions are documented. Also, spell out any special circumstances (e.g., donations of items never used). Finally, obtain a detailed receipt from the charity. You will need this documentation as proof when you file your 2014 return.

You can use one of the many online guides to value gifts of property. One of the most popular is the Salvation Army’s version.

Tip: Have high-value items independently appraised. Under a special exception, a donor can claim a deduction for a single item appraised at more than $500, even if it’s not necessarily in good condition.

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