Hoarders: your stuff might save you a bundle in taxes (if you’re willing to give it away that is)
Are you a late filer? Dreading October 15th? Has your accountant given you some bad news lately? Are you getting sick of paying taxes?
If you’ve got too much stuff and are willing to give some of it to charity, you can deduct fair market value of the items you donate to qualified charities. There are plenty of limitations but the basics are this: if you make an average income and you itemize, it will probably work in your favor to make non cash contributions, as long as the value of these contributions is not more than 20% of your adjusted gross income.
Take a moment to think about all the stuff you have that you need to get rid of. Instead of dumping it on trash day, take some time next weekend to sort it. If anyone at all could use it, chances are there is a charitable organization who needs it. Even if it is not in mint condition, it might be worth something to somebody. Isn’t that why you had trouble getting rid of it in the first place? Why not consider giving some of it away, knowing it will go to good use, and get a nice deduction on your taxes in the process.
Why this is a win-win: We are still in a recession, and a lot of people are struggling, perhaps many who have never struggled before. Your old coffee table with that stain on it might be the only table newlyweds can afford, if you were to take the time to donate it, that is. You’re pocketbook might be a bit stressed as well, and that contribution you made is 25 bucks you don’t have to pay in taxes next year.
Here is a nice guide to value of common items from the Salvation Army
Do it now. Do not put this off. If you are still reading, you have something to give. Put it on your to do list at the very least. You will thank yourself come tax time (can you say, ‘refund’?) plus you’ll feel good for giving as well!
It’s not just thrift stores who can benefit from your stuff either. Do you have any artwork, or strange artifacts, hand-me downs from an elderly uncle that are just collecting dust? Consider contributing these items to an appropriate museum. There is a museum for just about everything. My quick search came up with a couple of museums that are pretty out there:
Cartoon Art Museum in San Francisco
American Banjo Museum in Oklahoma City
Due to economic downturn, some museums are not currently accepting contributions. Budget cuts force layoff of museum staff that might normally take care of contributed artifacts. Here is one example:
Here are some general contribution guidelines from the IRS: (http://irs.gov)
- For any contribution of $250 or more, you must have written acknowledgment from the organization to substantiate your donation. This written proof must include the amount of cash and a description and good faith estimate of value of any property you contributed, and whether the organization provided any goods or services in exchange for the gift.
- To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return.
- An appraisal generally must be obtained if you claim a deduction for a contribution of noncash property worth more than $5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to your return.
2009 deduction limit was 166,800 AGI for married filing jointly, $83,400 if filing separately. If your adjusted gross income is above this, there is a worksheet which will help you figure the percentage of contributions you can deduct. In addition, if your contributions are more than 20% of your AGI, your contribution may be limited according to the type of property you give and the type of organization you give it to.
Keep in mind this only matters if you are itemizing deductions on your 1040 (Schedule A). If your total deductions are not more than your standard deduction, you do not need to itemize (in 2009 the standard deduction was $11,400 before personal property for married couples filing jointly). In this case it makes more sense (and dollars for you) to go ahead sell your items.