So I'm cleaning out my house and I have (I assume) clothes and items I could donate that's looks to be a little over $500 non-cash charitable donation.
I heard about itemized receipt and I want to do that but is it worth it? Like if I (assumed) my math could be $800 worth of donations. What should I do and what form should I be ready for?
I know there's a form but how would I know if it's worth me filing or qualified for?
Any suggestions or answers would help me understand taxes more.
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First determine if you are better off to itemize deductions. If so, deducing your contributions is not difficult and TurboTax handles the forms and calculations.
A charitable donation almost never changes your tax due or refund all by itself. First, your donation does not count "dollar for dollar"--it is calculated by a percentage based on your tax bracket. You need a LOT of other itemized deductions like mortgage interest or property taxes, medical expense, etc. to itemize and exceed your standard deduction.
If you do not have enough deductions to itemize, then your donations will not affect your refund or tax due. You will just receive the standard deduction.
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts) The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
Your standard deduction lowers your taxable income. The standard deduction makes some of your income “tax free.” It is not a refund. You will see your standard or itemized deduction amount on line 12 of your 2023 Form 1040.
2023 STANDARD DEDUCTION AMOUNTS
SINGLE $13,850 (65 or older/legally blind + $1850)
MARRIED FILING SEPARATELY $13,850 (65 or older/legally blind + $1500)
MARRIED FILING JOINTLY $27,700 (65+/legally blind) ) + $1500 per spouse
HEAD OF HOUSEHOLD $20,800 (65 or older/blind) + $1850)
2024 STANDARD DEDUCTION AMOUNTS
SINGLE $14,600 (65 or older/legally blind + $1850)
MARRIED FILING SEPARATELY $14,600 (65 or older/legally blind + $1500)
MARRIED FILING JOINTLY $29,200 (65 or older/legally blind + $1500)
HEAD OF HOUSEHOLD $21,900 (65 or older/legally blind + $1850)
Regarding the value of a tax deduction:
$800 of donations would save you between zero and $200, depending on your income, and whether or not you have enough other itemized deductions (like state and local taxes and mortgage interest) so that you are already taking the itemized deduction on your tax return. If you are not already using itemized deductions, then $800 of donations is likely to be of no actual tax benefit to you.
Regarding receipt requirements:
If you donate items with a fair market value over $500 but less than $5000, you need a form 8283, but you do not need signatures from the charity or an appraiser. The documentation requirements are on page 20-21 here,
https://www.irs.gov/pub/irs-pdf/p526.pdf
What the IRS says, is that for donations less than $250, you need your own list of items, in sufficient detail that someone could determine their fair market value, and a receipt from the charity. A drop-off receipt is acceptable as long as your own list has sufficient detail.
The the IRS says that for a "deduction" of between $250 and $500, you need a written acknowledgment from the charity, but they also say that you must have separate acknowledgements for each donation over $250. This creates some confusion as to whether, if you made two donations of $200 each, do you need to follow the rules for donations under $250 or the rules for donations between $250 and $500. I will say that I personally have never gone so far as to ask the charity for a specific acknowledgment, but I have not been audited. I have seen comments on this board from people who were audited where a drop-off receipt was not enough. What the IRS really is concerned about, is can you prove that you actually donated the items on your list. I donate to Goodwill and they give a blank receipt that has all the details required except a signature from the charity. I think that would suffice for the IRS if I could get someone from the charity to sign either the receipt (that I can staple to my inventory list) or sign my inventory list.
For donations over $500 but less than $5000 you need the same information, except that your inventory list should also have the approximate date you acquired the item and the approximate price you paid. You can make your best guess--the point is to show that you paid more originally than the value you are claiming for used items, and unless you are donating collectibles that you claim have increased in value, I don't think anyone is going to have a problem with you claiming a reasonable value for a used frying pan as less than the cost new.
So what you really need, is a detailed list of items, and a signature from the charity that you really donated the items on that list. I would call ahead, and try and talk to a manager about how they handle this type of situation. If they insist that they don't provide signatures but "it's ok", then it's up to you whether to make the donation or find a different charity. Certainly lots of people donate with simple receipts and never get audited, and I do that myself. But the IRS written rule is that you should have something from the charity acknowledging that you really did donate the items on your list. (The charity will not provide a specific value, so don't ask. You will determine that later. You want them to acknowledge receipt of your specific items.)
Thank you for the breakdown.
It's just my mom and I are trying to declutter her house and its a lot of stuff, may not be worth $800 but with basically a whole house items being bagged and boxed to donation it seems like it. we are use to going with old clothes and toys like a bag or two, but this is basically major decluttering. I heard about itemized deduction on donation, just wasn't sure how would one know if its up the value unless you wrote everything down on a notebook.
What would you suggest in this case, is it worth itemizing or no?
If iteming is the option, we just have to keep the receipt we get to keep track on how much we gave them.
As well, when we do itemize its collected amount from each donation, for example: total $700 one person donation to these places:
$150 to goodwill, $450 to salvation army, $100 to Veterans Donation Pickup (all items, electronics to clothes for each or one location) on the form.
It's almost like we are downsizing the stuff that's collected in the house.
Also, sorry for asking, just wanted to make sure. Before we go wasting time on a list.
I can't tell you anything more about the potential value of the donation. If your mother already itemizes her deductions on schedule A (medical expenses, mortgage interest, property taxes, other gifts to charity like church tithes), then adding $800 of household items will probably result in an additional tax savings of $125-$200. If she uses the standard deduction and doesn't have enough specific deductions to itemize, then there will probably be no tax savings from this donation. But someone would have to review her actual tax return for 2023 and expected situation for 2024 to know for sure.
Each donation (different day, different time, different charity) is listed separately on the tax return.
Okay, thank you so much.
It was hard to find a clearer answer to understand the itemized deduction for charitable donation.
I keep this mind. Thank you so much for answering my question.
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