Hi. This is Sherry Peel Jackson back with another installment in our series on BASIC FINANCIAL SURVIVAL
Since we are getting close to the end of the year and many are preparing for tax time I’ll give you a tax tip to snatch more of your money back from the Insidious Representatives of Satan, also known as the IRS.
This tax tip will work for people that itemize deductions. If you usually complete the Schedule A this tip may help you acquire as much as $5,000 in deductions, or even more!
This tax tip is called the Salvation Army/Goodwill goodie. Most of you know that on the Schedule A/Itemized Deductions form there’s an area for contributions. Contributions come in the form of cash and non-cash. Cash contributions are monies that you give to non-profit organizations like churches, humanitarian charities and civic associations. Non-cash contributions are items given to these same organizations.
On the Schedule A in the section entitled “Gifts To Charity” There is a line that says “Gifts by cash or check” and another line that says “Other than by cash or check.” At the end of each year most people receive statements from churches and other organizations that detail how much cash they gave. However, most people put $500 or less on the “other than cash” line. This is where people miss out on thousands in deductions.
If you plan to deduct more than $500 in non-cash charitable contributions the only thing you need to do is complete one extra form called the 8283. All that form asks you is who you gave to, when you gave, what you gave and the value of what you gave. Not a scary prospect at all.
Now I’ll tell you how to keep more of your hard earned cash.
When the American Kidney Fund or other charities call and say they will have a truck in your area, or when you accumulate enough clothes and other stuff in your closet that you need to give it away, do this:
- Take all of the clothes, shoes and other items out of the closet and lay them neatly out on the floor.
- Take a picture of the items and print the picture as soon as possible.
- Take a pen and paper and write down all of the items that are on the floor.
- Place the items in a plastic bag and put the bag in the front porch if they are coming to get it, or in your car to take to the Goodwill.
Now, you will receive a receipt in the front door if they are picking the bag up, or you need to obtain a receipt if you are dropping the bag off. You have a receipt, a picture and a listing of what you gave. On the Salvation Army website is a thrift store value guide.
This guide gives the thrift store value for most items that we accumulate in our homes. For example, women’s suites are worth between $6 and $25. Well, you can’t tell most women that their suites aren’t worth at least $25. Therefore, 4 suites in one bag is a $100 write-off. Now I hope that you can see that one bag alone can be worth more than $500!
You can give as often as you want and accumulate as many receipts as you can get your hands on. To add to this goodie, you can get clothes and stuff from family members and friends that don’t itemize. If they don’t file tax returns or if they don’t have enough write-off’s to use the Schedule A, you can go to their homes, pick up their stuff and take it to the Salvation Army!
When they give you their stuff it is a gift to you, and its value is the same as it was when it belonged to them. For example, if Aunt Mary is 68 years old and doesn’t file any more but she gives you 4 nice suites, you can take them to the Goodwill and get a $100 write off from that gift! Make sure you have pictures and a listing of what Aunt Mary give you.
When you keep good records of what you gave, have your receipt from the charitable organization and have pictures you have two good legs to stand on if you are ever audited!
I try to give non-cash donations to organizations twice a month. That way I have at least 24 receipts at the end of the year. With the donated items listed on paper, an accepted thrift store valuation sheet and pictures to show that my deductions are legitimate and accurate I am confident that my donation deductions will stand up to any scrutiny.
I hope that helps you see that you still have time to get thousands of dollars in write offs this year. Here’s to charitable giving and keeping what we earn. If you’d like to learn more ways to keep what you earn, get my Basic Financial Survival book.
Until next time, this is Sherry Peel Jackson, signing out!