Don't Dump It, Donate It!
Deductions Made Simple
Get a tax break for doing good! Follow these tips from Amy McAnarney, executive director of the Tax institute at H&R Block, to write off your contributions the right way.
Do a background check. Before you donate to a charity, make sure it has 501(c)(3) tax-exempt status. Visit irs.gov or charitynavigator.org.
Record every item you contribute and its fair-market value, which is the amount you'd typically pay for it at a thrift store. "The IRS keeps a close eye on charitable deductions, so be careful not to overstate yours," warns McAnarney. Publication 561, located on irs.gov, can help you figure out the value of various items.
Get a receipt or a letter of acknowledgment from the charity you give to that includes its name, the date of the donation, and a list of contributed items. If you donate something valued at $5,000 or more (such as jewelry), you must get an appraisal before you can claim it.
Use the right forms. If you make a non-cash donation totaling more than $500 in value, file it using Form 8283 ("noncash Charitable Contributions"). Report items of lesser value on lines 16 through 19 of Schedule A on Form 1040.
Originally published in Ladies' Home Journal, November 2009.
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