Deducting Contributions to Charity

What I see most of all is the deductions estimated incorrectly. By and large, people undervalue clothes and they overvalue the other goods. So unless you know the exact value of the other goods, be sure to ask your tax professional. You buy a couch for eight hundred dollars, sell it ten years later, and give it away ten years later. You’ll make maybe $100 or $250 max (if it’s in really good shape). Clothes, on the other hand, if you go into a thrift shop and look at the cost of the clothes, they range from $3 or $4 dollars up to around $15 depending on the item. Average $7 to $9. So when you give away bag of clothes how many articles are in there small bag maybe 20-25. A big bag maybe 30-3. Multiply it times the $7 to $9. That’s what you get per bag. Usually people make that very low when it’s much higher. You can separate your donations into several several times throughout the year or all at once. For those of you that are retired, taking minimum distributions, and also giving to charity, don’t itemize, you’re not getting that charity deduction. So, the way you get the charity deduction is to have the RMD go directly to the charity. You can call your broker, or people that handle your IRA, tell them you want to give to a qualified organization. Don’t take that portion. Send it directly over to the charity, then that portion of the RMD is not taxable, which lowers your tax and lowers your AGI or other items in your return. A lot of people give goods they don’t need away to thrift shops, churches, various charitable organizations. Of course, they need to be qualified general 501c3 organizations. Bernstein Financial Services Inc. has guided business owners through the complexities of the tax code and improved their profit margins since 1989. The information provided in this blog post is for general informational purposes only and is not intended as legal advice. Every business and financial situation is unique, and the strategies discussed may not be applicable to your specific circumstances. For personalized guidance, please schedule a consultation appointment with a Principal at Bernstein Financial Services to help you determine your optimal planning strategies.