Most charities, regardless of type, rely on charitable donations in order to stay in “business.” Some may solicit your help, either through the phone or by mail. While you may be eager to help, you need to ask the charity a few questions. Ask them if donations to their organization are tax deductible (if reducing taxes is your motive). If charitable
donations are tax deductible, your federal taxes will be reduced because of your contribution. Do not confuse tax deduction with tax exemption. If a charity has tax exemption status, it simply means the organization pays income taxes.
Usually, organizations related to parks, religious institutions, veterans’ organizations, and other volunteer-based groups qualify for a tax deduction on your federal income taxes. According to the IRS, your taxes will be reduced on the year in which you made the contribution. Depending on the amount of charitable donations you contributed, you can reduce your adjusted gross income by 50%.
If a charity solicits your charitable donations, pay attention to the information provided. If someone tries to “double talk” you, run! It may be a scam. Before contributing any money, you should check out the organization. The best organizations to contribute to are local entities. You can talk to the charity in person, instead of over the phone.
Both money and physical property are acceptable for donation and are tax deductible. If you donated property, you should figure out the depreciation value of the item. The types of property that most legitimate charities will accept include:
- Clothes- donating old clothes is a very popular option. Usually, these clothes are old, but in reasonably good condition. It is advised that you wash the clothes before donation. Clothes can be tax deductible, but it is usually a very small deduction. Old shoes can be donated as well.
- Toiletries- toiletries are items found in your bathroom. Of course, these donations should be unused. These types of items are needed for places like the Red Cross and the Salvation Army. Toiletries are needed for the homeless or for those who were recently displaced (due to fire, flood, etc.).
- Cars- there are many charities that accept used cars, particularly for war veterans. Because many veterans retire with minimal funds, many charities cater to war veterans who cannot afford a mode of transportation. Most car recipients are Vietnam War veterans, although veterans from the first Gulf War have begun to utilize these services as well.
- Computers- before you put that five-year-old computer out to pasture, think about those who would benefit from using it. Regardless of memory capacity, there are many people who have never owned a computer in their life. Consult an expert to see if your old computer is a good candidate for donation.
- Musical Instruments- if you don’t use that old violin grandma gave you donate it to charity. There are lots of children (and adults) that would love to have your old instruments.
Things such as furniture, eyeglasses, books, and food can also be donated to a charity.
Before you throw out your “useless” items, think about it for a moment. Remember, someone else can benefit from your generosity, regardless of your motives.
By Michelle Presbury