Declaring charitable deductions in excess of receipts

thedrills

Level 2 Member
Just wondering what other people do.
As a NYC resident I have crazy state and city taxes. The only plus is that it allows me this year, along with my charity to itemize and get more back.
How risky are you about reporting charity. I personally am trying to find all my transactions and receipts but it doesnt total my spreadsheet where I keep track of my charitable donations. Worst case scenario (I hope) I get a letter to substantiate my charity and anything I cant substantiate they will adjust. The rest of my return simple. but if they dont ask I get back more.
 

GettingReady

Level 2 Member
Just wondering what other people do.
As a NYC resident I have crazy state and city taxes. The only plus is that it allows me this year, along with my charity to itemize and get more back.
How risky are you about reporting charity. I personally am trying to find all my transactions and receipts but it doesnt total my spreadsheet where I keep track of my charitable donations. Worst case scenario (I hope) I get a letter to substantiate my charity and anything I cant substantiate they will adjust. The rest of my return simple. but if they dont ask I get back more.
It's not something I would do. Certain criteria has to be met to be considered a charitable deduction and receipts are required for amounts over $250. Below that you're still required to have a record of the donation. The following is from irs.gov.

Topic 506 - Charitable Contributions
Charitable contributions are only deductible if you itemize deductions on Form 1040, Schedule A (PDF), Itemized Deductions.

To be deductible, you must make charitable contributions to qualified organizations. Payments to individuals are never deductible. To determine if the organization that you have contributed to qualifies as a charitable organization for income tax deduction purposes, refer to our Exempt Organizations Select Check tool. For more information, see Publication 526, Charitable Contributions and Can I Deduct My Charitable Contributions?

You can deduct only the amount that exceeds the fair market value of the benefit received if your contribution entitles you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance, or sporting event.

For a contribution of cash, check or other monetary gift (regardless of amount), you must maintain as a record of the contribution a bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution. In addition to deducting your cash contributions, you generally can deduct the fair market value of any other property you donate to qualified organizations. See Publication 561, Determining the Value of Donated Property. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed. The acknowledgment must say whether the organization provided any goods or services in exchange for the gift and, if so, must provide a description and a good faith estimate of the value of those goods or services. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.

You must fill out Form 8283 (PDF), Noncash Charitable Contributions, and attach it to your return, if your deduction for a noncash contribution is more than $500. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $500,000, you also will need to attach the qualified appraisal to your return.

Special rules apply to donations of certain types of property such as automobiles, inventory and investments that have appreciated in value. For more information, refer to Publication 526, Charitable Contributions. For information on determining the value of your noncash contributions, refer to Publication 561, Determining the Value of Donated Property.

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Page Last Reviewed or Updated: January 04, 2016
 

thedrills

Level 2 Member
I know the rules. I'm just wondering what people do. Since I think the worst case is that the irs adjusts your itemized deductions accordingly and youwill have to return some of the excess return you got
 

GettingReady

Level 2 Member
I know the rules. I'm just wondering what people do. Since I think the worst case is that the irs adjusts your itemized deductions accordingly and youwill have to return some of the excess return you got
Seems like that would be the best case scenario not the worst case scenario.
We don't itemize thus our charitable donations aren't deductible. If I did itemize, and if I chose to take the deduction, I would definitely want documentation. I don't want to get on an IRS hit list. :)
 

thedrills

Level 2 Member
Seems like that would be the best case scenario not the worst case scenario.
We don't itemize thus our charitable donations aren't deductible. If I did itemize, and if I chose to take the deduction, I would definitely want documentation. I don't want to get on an IRS hit list. :)
Ok very good. That's why I'm asking. I'm actually not taking as much as I can bec I agree I'm getting receipts. I gave a couple of hundred dollars to help someone who couldn't pay tuition (which isn't deductible) but there are ways people would wing being able to deduct it.
 

MickiSue

Level 2 Member
Supporter
Most of my donations are items, not dollars, and the receipts tend to be blank. So I max out the $250 by assigning $250 to both Husband and myself.

Given the number of clothing items and household items that we regularly donate to Goodwill, we easily hit that. I've gone through the calculators that you can use to determine value of personal items that are donated, and it usually hits around 600 or 700. But I try to be safe.
 

Sloebrake

Level 2 Member
I ponder what "fair market value" means.

1) Buy a brand new shirt that retails for $100 for 50% off - like every retail store does every weekend
2) Donate the shirt, still new, after the sale is over - so fair market value is $100
3) Count a $100 dollar charity donation for taxes - If you can get: discount > 100-your highest tax bracket, than you make money in April.

If that flies I can imagine between gift cards/portals and MS it's win-win for bigger tax return and happy local charity.
 

Matt

Administrator
Staff member
I ponder what "fair market value" means.

1) Buy a brand new shirt that retails for $100 for 50% off - like every retail store does every weekend
2) Donate the shirt, still new, after the sale is over - so fair market value is $100
3) Count a $100 dollar charity donation for taxes - If you can get: discount > 100-your highest tax bracket, than you make money in April.

If that flies I can imagine between gift cards/portals and MS it's win-win for bigger tax return and happy local charity.
The value used for clothes would be the price that someone might pay for the item in a thrift store, not the sticker price (discounted or other) in a retail store.

Page 4 https://www.irs.gov/pub/irs-pdf/p561.pdf
 

MickiSue

Level 2 Member
Supporter
What Matt said. You can find calculators for the value of used clothing online, or buy them, if you are so inclined.

But the minute you take it out of the store, it becomes used, just like a car.

FWIW, I tend to value, for ease of calculation, most used clothes at $1-$2/each. Used books at $1. I KonMari'ed my bookshelves last year, so I have $147 worth of deductions from that. If Husband and the kids who store things here would do the same, we'd have at least $400 in deductions.
 

AnyNameYouWish

Level 2 Member
I keep a folder just for donation receipts. If I make a contribution, I copy a form from the organization, or my check, or a receipt. Even cash can be quickly noted, date, time, amount, who, where, etc. Always something so I have some proof. I don't deduct for anything without that proof. Probably a good habit to get into so you don't have to worry next year and still get the full benefit of your donations.
 

Sloebrake

Level 2 Member
But the minute you take it out of the store, it becomes used, just like a car.
Ah, that's where it would break down. The publication only addresses used clothing and I was thinking you could donate it as new if it was never worn/used.

Thanks for the reading too, it was much more painful than I anticipated.
 

Cytraveler

Level 2 Member
I always have a lot of charitable deductions, nearly all in checks or online donations. So I have receipts from the organizations, which are all clearly nonprofit and have a clear receipt. Easy.

But I also have used clothes, etc. that are in-kind donations. I use Turbotax for estimating the value, and I'm conservative about the quality of the items (I find Turbotax assigns a greater value than I would have anyway). For me, I am deducting fewer items than I donate anyway to stay below the $500, and that's a relatively small part of my charitable deductions.

As others have said, you do NOT want to get on the bad side of the IRS, so being conservative is always a good idea. They have an incredible amount of power.
 
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