Site icon WCG CPAs & Advisors

What are some of the donations I can deduct?

WCG

By Jason Watson ()

There are several different types of property donations, some of which are very obscure.  Generally your donation of clothing, household items, food, cash and cars are the most common.  However, you can also donate taxidermy property (really?), your interest in a property, a qualified conservation, business inventory and intellectual property such as patents.  And Yes, there are rules for all this.

Clothing and Household Items: These donations must be in good used condition or better, and include furniture, electronics and appliances.  Household items do not include food, paintings, antiques, jewelry and other collections.  While these items might be deductible, they are not considered household items.  How items are grouped and entered on your tax return changes some of the reporting requirements to the IRS.

Cars, Boats, and Airplanes: Most charities who accept cars et al will sell them at auction and then provide you with documentation of the sale.  If the donation (i.e., the sale proceeds) exceeds $500, a form 1098-C is sent to the IRS.  Typically this is mailed after your tax return is eFiled and accepted, although more advanced tax software is now allowing the attachment of this form in PDF format (which is pretty cool).  If this figure is between $250 and $500, all you need is a written statement from the organization (not form 1098-C).

Also, a bit of caution and disclosure is in order here.  First, many salvage and junk yards might appear as charities.  Do your homework before you donate.  Second, and arguably more important, you can typically do better by selling the car, boat or airplane directly, and donating the cash to a charity of your choosing.  For example, your clunker is worth $1,000 on craigslist, but at auction it might be only worth $500.  Your tax deduction increases by $500, and your local charity gets a quick $1,000.  Everyone wins.

There are some other rules and exceptions of course, such as the deduction amount if the car is used by a charity in carrying out their mission activities (for example, Meals on Wheels).  In this situation, you would be able to deduct the fair market value of the car and not the auction price.

Food: You can donate food and deduct the value of the contribution if the food meets quality and labeling standards.  The use of the food must also be related to the organization’s tax exempt purpose, and be used for the ill, needy or infants.  A written statement from the organization must be provided to you detailing these provisions.

Cash: Cash contributions include those paid by cash, check, electronic funds transfer, credit card, payroll deduction and text messages.  See Do I need receipts for my donations? below.

Exit mobile version