It’s hard to believe that the school year over and summer is just around the corner. This is a great time to go through your kids’ closets and donate all of those clothes that no longer fit or sports equipment that they have outgrown. While you are at it, summer is also a great time to go through your own old and weathered items as well.
By spending a couple of weekends or so cleaning out your closets, storage rooms, and garage your home can benefit in three ways. One, your home will benefit by the reduction in clutter. Second, others can benefit from your unused items if you donate them to charity. Thirdly, you can benefit financially because charitable donations can be deductible on your tax return.
Below are seven things to think about if you are considering donating your old household items to charity.
1. Do I Qualify To Take A Charitable Deduction?
If you would like to donate your old household goods and would like to claim a tax deduction, the first thing you should determine is if you are eligible to take a tax deduction. The Charitable Donation deduction is available to you if you are also eligible to itemize your deductions on your tax return (Schedule A). All tax payers are eligible for the Standard Deduction. For 2017, the standard deduction is:
Filing Status Standard Deduction
Head Of Household $9,350
Married Filing Jointly $12,700
Married Filing Separately $6,350
You are eligible to take itemized deductions if the total of all your deductions is greater than the Standard Deduction for your Filing Status. For example if you file Married Filing Jointly and your mortgage interest deduction for 2017 is $10,000, your state tax deduction is $2,500, and your charitable deduction is $3,000. Your total itemized deductions of $15,500 exceed your standard deduction of $12,700. Therefore, you can itemize all your deductions on Schedule A.
2. Who Should I Donate My Items To?
The good news is that there are plenty of charitable organizations that you can donate your household goods to. However, to qualify for the charitable deduction, the organization must be a Qualified Charitable Organization that is tax exempt and eligible to receive tax-deductible charitable contributions. Examples of qualified organizations are churches, Goodwill, Veterans groups, and The Salvation Army. Examples of non-qualified organizations are country clubs, political organizations, and social clubs. To find out if a charity qualifies click here.
3. What Is the Deadline?
If you want to make a tax deductible donation, you have to do it by December 31st and charitable donations are only deductible in the year the donation is made. That is why it is a good idea to donate most of your charitable contributions in the summer when you have the time and energy to do it. It gets more challenging to take this project on when you are also dealing with school plus the Holidays.
4. What are the limits?
Keep in mind that there is a limit to how much you can deduct on your tax return for charitable donations. Depending on the organization, your deduction will be limited to 30% or 50% of your Adjusted Gross Income. This will probably only impact you if you plan on donating large dollar value items. For most household items, this shouldn’t be an issue. However, if you do fall into this category, any amount over the limit can be carried over and deducted the following year.
5. Do I Need To Track My Donations?
You must have a written record of your donation to deduct it on your tax return. The written record must show the name of the organization, date, location of contribution, fair value of contribution, and description of items donated. For any non-cash contributions less than $250, you will need a receipt from the organization as the record. For donations greater than $250 but less than $500, you will need a written acknowledgement (letter of some kind) as the record. If the donation is over $500 but less than $5,000 you will also need documentation that shows how you acquired the property (purchase, gift, inheritance, etc.). Anything above $5,000 will generally require an appraisal as well.
6. How much is it worth?
Turbo Tax has a free tool called “It’s Deductible” which give you options for determining the market value of your donation depending on its condition. It also allows you track your donations throughout the year. To find out more go to Turbo Tax.
7. What Can’t I Donate?
There are certain items that charities will not take. They will not take your broken or unusable items. Basically, it has to be in working order and can be used or re-sold by the charity. It is best to check with the charity you are working with to find out what items they will not accept.
For more information on de-cluttering your home and giving to charitable organizations at the same time, go to http://www.home-storage-solutions-101.com/donate-household-items-to-charity.html