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Top Five Ways Uncle Sam Reimburses You For Helping Others

May 26, 2011 | Comments: 0 | Views: 126

Every year, generous families around the country help others by donating time, money and goods to thousands of organizations and underprivileged recipients. But many taxpayers are NOT taking advantage of the income tax benefits that the IRS legitimately allows for their efforts. By using the proper forms and methods, your income tax savings can be in the hundreds, maybe even thousands.

While most taxpayers keep track of their monetary donations, many do not keep track of their non-cash or other charitable contributions. In many cases, these donations may even exceed your cash donations in value. Lets take look at the most common Non-Cash charitable donations and see if you may be able to make better use of these items in the future.

1. Donation of Clothes: If your spring cleaning of the closets has you selecting a variety of gently used garments to pack up and deliver to the local Goodwill, Salvation Army or AMVETS location... join the club. It is easier than having a yard sale and may be a better financial decision too.

While most garage sales collect very little, donating those same items for a fair market value can get you a sizable income tax deduction. On average the fair market value for clothing is about 30% of the new item pricing. This can add up quickly when you look at a pair of slacks at $40 to $80 and women's blouses at $30 to $120 or more. As styles change, children outgrow or we add new clothing, many people clean out those closets a few times each year. Don't forget to itemize your donations and get a receipt for your kindness.

2. Donation of Grocery items: Another common item that is donated on various occasions is canned goods, grocery items and even frozen turkey around the holidays. If you participate in these programs, you are entitled to take a deduction for the price that you paid for these items. With food pantries and soup kitchens in constant need of assistance along with school and church food drives, these donations can add up quickly each year.

3. Mileage for Charitable Activities: If you are one of those special individuals that donates your time and a smile to Meals on Wheels or any other non-profit organization that provides needed services in your community, the IRS will allow you to take a deduction of 14 cents per mile (for 2011) for any miles that you incur during your efforts. This can include your participation as a Scout leader, Little League board member or commissioner and many other volunteer activities. You will need to keep an extemporaneous log of your miles driven for these volunteer purposes.

4. Donated Electronics, Computers, Appliances: Many schools, boys and girls clubs and other non-profit organizations are happy to take donations of older electronics that still work. They will provide a receipt and in some cases provide a fair market value for your donation at the same time. But you need to ask for the written and itemized receipt when you make the donation if you plan to take the deduction.

5. Donated Automobiles: There are still several organizations that welcome used automobiles as a donated items. These usually represent a larger value and you should have the organization provide a market value appraisal along with their written receipt. In some cases they will even take vehicles that are not working and get them fixed for resale or use them for parts. Either way, you are allowed to take a deduction for the fair market value of your donation.

Summary: The key to all of these non-cash donations is to make sure that you get a receipt for your donation and prepare a detailed list of the items donated. While each of these five areas can save you a sizable amount of income tax, if your total is going to be more than $500, you will need to have your tax adviser file a separate form for these donations.

It is the IRS Form 8283, specifically designed for Non-Cash Charitable Contributions. It is not a hard form to fill out, but I believe you should also send a copy of your itemized list and the receipts along with your return. It is always better to over-document your deductions, especially since you have taken the time to keep good records.

If your tax preparer is reluctant to use these deductions or come up with the fair market values... look for a new tax adviser. The money you save could pay for a vacation or be added to your retirement accounts to save even more.

To discover additional financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.

Keith is also the author of "How To Get Your College Education For Less". Available on - ISBN No: 978-1-4538-2053-7.

You can get your FREE Wealth Expansion Kit, or check out his blog by visiting

Source: EzineArticles
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