Author Topic: Deducting charitable donations on taxes?  (Read 2889 times)

MayDay

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Deducting charitable donations on taxes?
« on: April 11, 2015, 06:57:31 PM »
What am I missing...

We donate a ton of stuff to goodwill every year, a combo of lots of gifts for the kids and lots of purging of misc stuff that we no longer use.  I kept track of my three biggest donations, writing how much of what was donated. 

I went to put it in the taxes for the year (last minute much?) and looked up the IRS rules for keeping track of stuff, as H had a coworker who was audited and got hit with a ton of penalties and fees due to improperly documented donations. 

My reading of the rules is that if your total donations for the year is over 500$, you need a ton of additional documentation- original purchase receipts, etc.  We of course have none of that.  2 or 3 bags of clothes will put you over 500$ at the goodwill-recommend value per clothing item. 

Am I missing something?

Our current plan is to just deduct 495$ and let the rest of it go.  I'm guessing we actually have about 1000$ documented via a written out list stapled to a generic receipt form goodwill. 

EAL

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Re: Deducting charitable donations on taxes?
« Reply #1 on: April 14, 2015, 02:49:14 PM »
Hi there. I am currently going back to college for an accounting degree and am an intern at an accounting firm during tax season, so I'm far from a CPA but I do have some basic knowledge. (The first degree was an unwisely planned Master's in history). The best thing you can do (and should) with anything you're going to deduct is to keep receipts and documentation for everything.  Goodwill will provide you with a receipt (at least ours locally does) that says the value of what you donate on each visit and it is signed by an employee. This way if you do get audited, your butt is covered.  Some people donate larger items to other places. For instance a client donated a valuable instrument with a value of thousands of dollars to a school. In this case, more documentation is required- for instance the school would have to sign a tax form (you can get this prepared by your accountant) vouching that person had donated that item and the estimated value is legitimate.  Also keep in mind, that you do not get to deduct 100% of the value of what you donate, even when donating cash a percentage is taken. 

James!

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Re: Deducting charitable donations on taxes?
« Reply #2 on: April 14, 2015, 02:56:03 PM »
What am I missing...

We donate a ton of stuff to goodwill every year, a combo of lots of gifts for the kids and lots of purging of misc stuff that we no longer use.  I kept track of my three biggest donations, writing how much of what was donated. 

I went to put it in the taxes for the year (last minute much?) and looked up the IRS rules for keeping track of stuff, as H had a coworker who was audited and got hit with a ton of penalties and fees due to improperly documented donations. 

My reading of the rules is that if your total donations for the year is over 500$, you need a ton of additional documentation- original purchase receipts, etc.  We of course have none of that.  2 or 3 bags of clothes will put you over 500$ at the goodwill-recommend value per clothing item. 

Am I missing something?

Our current plan is to just deduct 495$ and let the rest of it go.  I'm guessing we actually have about 1000$ documented via a written out list stapled to a generic receipt form goodwill.

I cannot speak to the rules, but I can say that I deduct more than $500 in donations to goodwill and the like, and all I have is their receipts, no original receipts. My taxes are done by a pro who used to be an IRS auditor, and he never asked me for additional info or said it would be necessary. IIRC, he said that generally unless your charitable donations approach 10% of your income they don't really care.

Just my $0.02


CommonCents

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Re: Deducting charitable donations on taxes?
« Reply #3 on: April 14, 2015, 03:31:57 PM »
We took photos of the items, and collected (blank actually) receipts from the charity.  If audited, we'll fill them out with the lists we already have.  We then input our donations into "itsdeductible" to get a value of items based on average online selling prices.  I personally err on the side of caution and 1) input everything as "medium" value unless it's actually still new with tags (luckily not many!), 2) only put on my taxes 80 or 90% of what we actually have.  I've heard that if you are audited, they actually need to ensure it's right, so if you underput things, you should get money back from them.  I may not fully maximize my deductions, but I get peace of mind this way.  And if I'm ever audited, I have some leeway if they challenge my donations (as say, being below good condition) so I wouldn't pay penalties, with the bonus for putting up with it that I should get that 10-20% back.

Note - if you are giving in a single item worth over a certain amount, I think you need an appraisal for it.

ETA - https://itsdeductibleonline.intuit.com/help/donationsTrackerHelpMain.html (free to enter information but I highly recommend printing a report - it unfortunately deleted information I entered for last years return)
"ItsDeductible generates item values using a blend of eBay sales data and thrift store pricing. To do this, we collect the data throughout the year and provide updated item values - known as "established values" - at the end of the year. This ensures that the item values provided on your tax form accurately represent the fair market values of the items when they were donated."
« Last Edit: April 15, 2015, 10:24:36 AM by CommonCents »

Sibley

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Re: Deducting charitable donations on taxes?
« Reply #4 on: April 15, 2015, 09:13:00 AM »
Make a list of what you donate. 5 shirts, 2 pants, etc. Get a receipt from goodwill or wherever. Make sure it's dated at least. Attach your list to the receipt. Assign thrift shop value to items (if you were to buy it at a thrift shop, what would you pay?). total it up - that's your deduction.

If you donate anything that's high dollar, first you maybe shouldn't be donating it (try selling). Second, maybe you're buying too much stuff (stop shopping). Third, pull out the IRS rules and figure out if there's anything in particular they want and do your best to get it.