There’s never a bad time to donate to charity, and the feeling you get from doing it is something that money can’t buy. Even so, it doesn’t hurt that donating also entitles you to a tax deduction, which is always welcome. The IRS has a list of charities that it recognizes, and once you’ve picked one, you can donate any of the following and get a nice write-off.
Donating stocks and other appreciated securities entitles you to an instant income tax deduction and credit for the FMV (fair market value) of the stock on the transfer date, regardless of how much you paid for it. In other words, you don’t pay any capital gains for the securities you’ll give away to charity.
Not only do you avoid the extra tax, but depending on the value of your securities, you could save up to 20% in taxation in addition to the 3.8% Medicare surtax. It should be noted however, that the price deduction is only for the price you paid for the security and not the appreciated amount.
There are several nonprofit organizations that make car donations a straightforward process, such as the Make-a-Wish Foundation. While tax deduction is certain, the amount depends on the money your chosen charity makes off selling your car. In other words, the deduction hinges on the car’s sale price. Meaning, if your $5,000 car gets sold for just $3,500, then $3,500 will be your total deduction. This wasn’t always the case, but the IRS changed the rules after some people started overvaluing their cars.
As far as money goes there’s no limit to the amount you can donate, but remember that anything more or less than $250 at a time will require a bank record which you’ll furnish to the IRS. In addition, you need to fill the IRS Form 8283 which you’ll send with your tax return, plus an acknowledgement letter from the charity you’ve donated to. It’s not really all that complicated, and once you’ve got all the documents and papers ready there shouldn’t be any problems here.
Appliances and Furniture
If you’re moving to a new place and don’t need those old appliances and furniture, consider donating them. A $150 write-off is yours for donating a washing machine, while TVs, copiers, computers and other appliances can be worth $250, assuming they’re all working. The larger the furniture you donate, the bigger the write-off, the best example being a bedroom set, which is worth a $1,000 write-off.
Probably the best part about this is you don’t have to worry about hauling the stuff off to charity as these organizations will do it for you. Just call the charity and let them know what you want to do, and they’ll arrange for the pickup. So not only do you get rid of excess furniture and appliances the best possible way –by donating- you also get a tax break.
Your choices are not limited to big items, as most anything can be donated and be worth a tax deduction. If you’ve got a good pair of sneakers you don’t use anymore but still in good condition, you can donate those, or maybe a floor lamp or other clothes. The tax write-offs for these won’t be as large of course, but if you donate plenty of items these can add up to a substantial amount.
The only exception to this would be luxury fur coats, which would be about $400, while a typical overcoat is written off for about $60, which really isn’t that bad at all if you have a lot to donate.