From Global Executive
Management Solutions (www.GEMMS.us) Newsletter
2011-06
With summer right around the corner, many people have been doing some spring
cleaning around the house. Instead of bringing old clothes, sporting equipment,
and household items to the dump, you should consider donating them to a local
charity or thrift store. Someone will find a use for your unwanted items and
you could potentially lower your taxable income if you qualify for itemized
deductions. You can qualify for itemized deductions if you exceed the allowable
standard deduction, which in 2011 is $5,800 for singles and $11,600 for married
couples filing jointly.
In order to maximize the tax benefits of your donations, you must first make
sure that you are donating the items to an accredited organization. The IRS
specifically defines a qualified organization, but the organization must, in
general, operate for religious, charitable, educational, scientific, anti-animal
or child abuse, and/or literary purposes. Note that donations made to specific
individuals or political organizations and their candidates never qualify.
However, donations to an entity which performs a substantial government
function, like a donation to your local police department, can be deducted. If
you have questions about whether or not a specific organization qualifies,
please see IRS publication 526, or give us a call here in the office.
Secondly, if you're donating clothing or household items to charity, the
items must be in good condition and you are only allowed to deduct the fair
market value of the item. In general, the fair market value is the price at
which property would change hands between a willing buyer and seller. This is
sometimes referred to as the “thrift market” cost of an item. Moreover, if your
contribution recently appreciated in value, this would mean more money in your
pocket. Remember that you'll need to collect a signed receipt from the
organization as proof of your donation. Furthermore, for contributions equal to
or greater than $250 in value, you must obtain written acknowledgement from the
organization showing the amount of cash or a description of any property
contributed, and whether the organization provided any goods or services in
exchange for the contributions. If you are feeling especially generous and plan
to donate an item or group of items worth more than $5,000, you might want to
consider having it appraised. In today's digital age, you might even consider
taking a pictures or a video of your non-cash charitable contribution as
further documentation of your donation. If you receive a benefit from
donating—like tickets to a baseball game for instance—you may only deduct the
amount that exceeds the fair market value of the benefit received. So, if you
are planning on doing some spring cleaning, be sure to follow these simple
guidelines. There are many other ways to leverage the tax benefits of your
deductible charitable contributions. If you have any questions, be sure to
contact this firm.
Charles “Chuck” E. Heyde, Jr., C.P.A. International Tax/Compliance Partner
Chuck is one of our guest expert
speakers for the Focus On Mexico
programs. Chuck is in charge of the International Tax/Compliance Services for
GEMMS. Prior to co-founding GEMMS, he was a Manager at two of the “Big 5″
accounting firms.
To learn more about Chuck and our guest speakers, click here…