• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

5 rapid-fire charitable deductions

Get PDF file

by on
in Small Business Tax,Small Business Tax Deduction Strategies

The time for cutting your 2017 tax bill is running out.

Strategy: Donate to charity. This is usually one of the easiest ways to generate extra deductions at year-end.

Although there are certain limits to contend with, here are five ways you can still donate to charity before 2018.

1. Charge it! It only takes a few minutes to fill out the information needed to charge a charitable donation online. For example, you might visit the website of one of your favorite charities or respond to an email. As long as the donation is posted this year, your contribution is deductible in 2017, even though you won’t actually pay off the credit card charge until 2018.

2. Cherry-pick stocks. If you donate appreciated property like stocks you’ve owned longer than a year, you can deduct the current fair market value (FMV). Thus, the appreciation in value since you’ve bought the stocks remains untaxed forever. If you want to donate a stock “loser” instead, sell the stock first so you can claim the valuable capital loss. Then you can donate the sales proceeds to charity.

3. Trade a clunker for a donation. Similarly, you can generally deduct the full FMV of a car donated to charity as long as it’s used to further the charitable mission. However, if the vehicle’s value exceeds $500 and the charitable organization sells it, your deduction is limited to the amount received by the charity in the sale. If you are able to deduct the FMV amount, have the vehicle appraised by an independent party. Note: The cost of the appraisal itself is deductible as a miscellaneous expense.

4. Sweep up deductions. Instead of dumping household items like used clothing and furniture in the trash, arrange for a pick-up or drop-off at a local charity. The tax law allows you to deduct the FMV of these items as long as they’re in good condition or better. Use one of the valuation guides available online.

5. Donate your time off. The IRS recently approved deductions for “leave” time donated to hurricane victims. If you forgo vacation, sick or personal leave you’re entitled to in exchange for cash payments your employer makes to a qualified charity, you won’t be taxed on the income donated to the charity. (IRS Internal Release IR-2017-60, 9/26/17)

Tip: In this last case, the employer claims the charitable deduction.

Leave a Comment