2.1 Cash and Donated Goods

In this section of lectures, we’ll cover some of the main ways you can give to an organization. We’ll cover both giving and volunteering. We’re going to start with cold hard cash. writing a check is a popular way for people to give to organizations. Some people like to use their credit cards to earn airline miles or reward points from the credit card company. The downside to this is that the organization must pay a fee to the credit card company of somewhere around 2% when you use your debit or credit card, which raises the administrative costs and reduces the funds available to the organization’s programs. Another popular way to support organizations and clean out your house is by donating household items. These items should be in good condition. US tax rules actually require them to be at least good condition to qualify for a tax deduction. Another popular item for donation to organizations are used cars. The amount you may deduct for us taxes is an amount not in excess of the price listed in a used vehicle pricing guide for private party sales. worked with nonprofits who received donated goods that they have very little use for. They don’t want to offend the donor. So they take the goods and then try to find some way to use them or find another organization to take them. You’ll be saving your favorite organization precious staff time. By checking that they can really use the goods or finding an organization that can better use your goods. You may be able to deduct both cash donations and donated goods from your income according to the US tax code. You have two choices for deductions on us personal income tax returns the standard deduction, which is a flat dollar amount based on your filing status, or by listing all your eligible deductions, which is called itemizing your deductions. you itemize your deductions if their total is higher than your standard deduction, cash and the value of donated goods are examples of of deductions that you can itemize. Here are a few things to know if you want to deduct them. You need to get a receipt from the organization for any donation worth $250 or more. You can deduct the value of Goods you donate, but organizations don’t value those goods for you. IRS Publication 561 explains the rules for determining the value of donated goods. Your tax preparer can assist you with setting values for donated goods. Some organizations also provide some general guidelines that may be useful. Another thing to remember is that the organization you give cash or goods to must be a qualified nonprofit for you to be able to take a tax deduction. You can research this on the IRS is tax exempt organizations search site. A link to that site is on the IRS tax resources for charities document at the end of this section of lectures. Cash and donated household goods allow a tax deduction. There are things you can give that may provide a deduction and avoid taxes on gains. I’ll talk about those in the next lecture.