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Anyone who has tried on new clothes at a retail store likely understands the exhaustive feeling when you put your old clothes back on – like you’re in shambles. If you’re anything like me, you’ll then go home and realize how little of your wardrobe you actually wear.
Take a moment to consider this. While you can quickly add to your wardrobe through shopping, you can conversely clean out your wardrobe for an easy tax deduction – all while looking pretty nifty in your new attire.
Who ever thought that saving money on your taxes could look so good?
Tax season is almost here and the nerd squad at Delap is looking forward to helping you save a few tax dollars. And get this – all you have to do to save those dollars is clean up around your house before January 1st.
As a general rule, you can eliminate up to 50% of your adjusted gross income through charitable contributions if you itemize. You can also carry forward contributions you are not able to deduct in the current year because they exceed 50%.
If you claim a non-cash charitable deduction of more than $500, you will trigger an 8283 filing requirement. Here at Delap, we generally file your 8283 using receipts you receive from charities.
What you need for this form are the following.
You might be wondering the following.
“How do I determine the value of what I gave?”
“What if I give items that are several years old and have been collecting dust in my closet for years?”
The IRS does state that you can’t claim deductions for non-cash items unless they are in good condition or better. If they are in good condition, there are easy to use tools online through charitable websites that will help determine your deduction. For example, the Salvation Army provides a helpful tool to determine the value of your items before giving them away.
There are also less common non-cash donations that we’ve seen. For instance, certain items (or a group of common items) over $5,000 or more, generally need an appraisal in order for the donation to be tax deductible. More specifically, some items have their own specific appraisal threshold. Non-publicly traded stock for example, only needs an appraisal if the deduction you claim is over $10,000.
It’s also a common misconception that public charities are the only place you can donate to in order to receive a deduction.
You can also receive deductions for.
Please consult Delap if you made any large non-cash donations or donations listed above so that we can best assist you in determining what qualifies as a deduction or if you will need an appraisal.
As you may have noticed, this blog discusses what the IRS needs before you can get a tax deduction. We would like to add that donating is always an easy way to help those in need, especially during the holiday season. Good luck giving and happy holidays!
Delap LLP is one of Portland’s largest local tax, assurance, wealth advisory, and consulting accounting firms, located in Lake Oswego, Oregon.