Discover Charity Donations!
Charity donations, one very important rule: you can't claim tax deductions for clothing or household items you donate after August 17, 2006, unless the clothing or household items are in good used condition or better. As the end of the year quickly approaches, the Internal Revenue Service for charity donations reminds taxpayers that they may be able to use their gifts to tax-exempt charitable and religious groups to reduce their taxes. From the taxpayers’ point of view, it’s all about getting the maximum benefits (a tax deduction) in return for their donations. In particular, there are some important guidelines for donating used cars and other property, such as valuables and collectible items.
Charity donations of bonds or other property are usually valued at the fair market value of the property. For stocks and bonds with an active market, the fair market value is the average price between highest and lowest selling price on the valuation date. It’s worth mentioning, that appraisal of the goods to be donated often presents a formidable task… Not surprisingly, determining the value of things offered through charity donations requires a very astute attitude. Some charity donations program operators have mistakenly suggested that donors can take as a deduction the full value listed in an established used things pricing guide.
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The tax law for charity donations, however, allows a deduction for only the fair market value of the car. Fair market value takes into account not only the year, the model and the mileage, for example of the car, but also the local market and the vehicle’s condition. As a result, the fair market value of the taxpayer’s car may be substantially different than the average price listed in an established used charity donations guide. You are required by the law, and IRS, to keep appropriate records that will show how the gift’s value was arrived at. For example, for any single gift for charity donations of $250 or more, a taxpayer must have a written acknowledgement from the charity by the earlier of the date the person files the tax return or the filing deadline, including extensions.
A person who participates at charity donations property valued at more than $5,000 must obtain a qualified written appraisal. Many charity donations centers are happy to accept used clothing and household goods and you're allowed to claim the fair market value of those items as a tax deduction. However, the quantity has dropped in the recent years... Under a provision of the Pension Protection Act, which became law for charity donations, any household goods you donate after that date must be at least in good or better condition. Its objective was to resolve two issues.
Firstly, some taxpayers were using charity donations as trash collectors for articles that really should have been put on a rubbish dump instead of charity donations bin. Secondly, the value these donors claims on the much used goods was much too high, meaning they got a larger tax break than they should have. This is the same issue lawmakers confronted when they tightened rules a couple of years ago on donated cars. Taxpayers must itemize to claim any charitable deductions. In case of older taxpayers, they choose to claim the standard deduction.
In fact, many older taxpayers find charity donations amounts even more appealing, since they are larger for filers age 65 or older. Thanks to the rollover option, standard deduction filers now won't miss this potential deduction. This solution will benefit some taxpayers, mostly those who must accept required minimum distributions but have enough of financial resources for daily expenses. In these cases, they won't have to pay taxes on the IRA distributions that are directly participating at charity donations.
As always, see your attorney for professional advice. 
Charity Donations Legal Disclaimer
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