Happy Good Samaritan Day! Today, March 13th, is a day when we should honor good Samaritans – and even partake in a good deed if the opportunity presents itself. So what types of good things can you do for others that also come with the benefit of an IRS tax break?
— Charitable contributions of clothing
If you donate clothing items to a reputable charity, such as a formally established 501(c)3 nonprofit organization, you may be able to write off these contributions when filing your tax return with the IRS. Clothing items like shirts, pants, shoes, scarves, and sweaters are often fully tax deductible. Keep in mind that the IRS maintains a list of “qualified charities” that allow taxpayers to claim these write-offs when contributing to them. It’s also important to only consider donating items in good condition or better. Finally, make sure you fully document all clothing donations and get a receipt if the nonprofit offers you one. Document the items you contribute and the names of the charities to which you provide them. You’ll likely need to use itemized tax deductions to claim these write-offs when the time comes to file your taxes.
— Charitable contributions of used vehicles
Another way to lend a helping hand to those in need is to donate a used vehicle to a nonprofit organization. If you have a used car sitting in your driveway that is valued at less than $500, the tax deductible amount you can claim for it is determined by the donor’s estimate of the vehicle’s value. For vehicles valued at more than $500, donors must obtain a written acknowledgement from a charitable organization to include with a tax return when the next filing deadline rolls around. Just like for clothing or other items, used vehicle donors should also use itemized tax deductions rather than taking a standard deduction. There are specific rules that individual charities have on the condition of a vehicle before they accept it as a donation, so be sure to contact the charity of your choice for this information.
— Establishing a nonprofit for a good cause
If you look at the major charitable organizations out there that are intended to serve a good cause in our society, there’s a very good chance they are arranged as nonprofit organizations. The 501(c)3 designation is a popular structure for many of these nonprofits. IF you have an idea to help fund a good cause, and you think it is fundable, consider possibly establishing your own nonprofit. Such organizations are vital in the community, and they are generally tax-exempt in the eyes of the IRS. This means you may not have to pay taxes on the contributions you receive through the charity.
1-800Accountant is here for all of your IRS tax assistance and can help you find ways to reduce your tax liability through deductions or credits. To learn more, call 1-888-749-01171-888-749-0117 or view www.1-800Accountant.