The final countdown is on…that’s right, 2011 is almost over. Are you ready for your 2011 tax bill? With one month to go, you still have a few more options to lower your amount due to the federal government. Let’s start with one of the most popular methods of deduction…
Giving is a traditional part of many of our holiday celebrations at this time of year. Thankfully, when we are eligible to itemize deductions, the government honors our efforts by letting us deduct our gifts from our taxes; a fact which helps us be even more generous than we might otherwise be able.
However, I am sure you join me in an even greater reason to give…the shear joy. With so many people in need and excellent charitable organizations facing a significant drop in donations, our help is needed more than ever.
So, during this countdown to the new year, take a few minutes to review your giving for 2011. Use the following guidelines to take advantage of tax deductions.
Be sure you get a written receipt from the organization showing its name, the date and place of the contribution and the amount given. For donations under $250, only, you can also use canceled checks or bank records to prove your deduction.
Worth over $500: You will need to file Form 8283 (Noncash Charitable Contributions) with your 1040.
Worth over $5,000: Obtain a written appraisal of the value of the item(s) and complete Section B of Form 8283. Signatures of both the appraiser and a representative of the charity are required on the form.
Publicly traded securities worth over $5,000
No appraisal needed. However, with appreciated securities in any amount, only donate those you’ve owned for more than one year or your deduction will be limited to cost rather than current market value.
Used Clothes and Household Items
Includes furniture and furnishings, electronics, appliances, linens, etc., which are at least in good condition. “Junk” items cannot be deducted.
Your deduction depends on the charity’s use of the vehicle. If the charity sells it (and does not use it significantly for making improvements or for other charitable purposes), your deduction will typically be the amount of gross sales proceeds. Also, be aware that the charity is required to issue detailed written acknowledgments on Form 1098-C to you and to the IRS…which the IRS can use to verify the information on your tax return.
I am thankful for your generosity to our community and world and want to make sure you get the tax deductions you deserve. If you have any questions or concerns about how you can optimize the tax write-offs of your 2011 charitable contributions, please give me a call to discuss.