One common theme at my last few Coupon Classes has been a break out discussion on donating items to charity (food pantries, homeless shelters and animal shelters) and then taking it off your taxes as a charitable contribution.
This can lead you into trouble if you aren’t careful as the waters on this are murky.
You can get tax advice from anyone, but the bottom line is – it is YOUR name on the return, which the IRS will gladly remind you at your audit. THEY gave out misinformation on an item a few years back to people calling in and the person who was hurt by THEIR mis-information? The tax payer.
You know I am all about using coupons to pay it forward and bless others. If you have been to my class – you might think I was more than obvious about the potential on that, LOL! Here is the rub: when we do nice things for other people, do we have to get rewarded for it?
I have sat in many different lectures (thanks to the world of FREE trainging from Tupperware) and listened to people say things like:
“If your dog is taller than your knee — and you have a home office, you can deduct all expenses for that dog as a “home security system”.
I can hear the IRS agent laughing at that one right now…..
Please keep in mind that I have been through an audit.
It lasted only 10 minutes because I pulled out every neat little pile of receipts from the box that year, in order and asked where they wanted to start. Receipts are your friend.
Now – let’s cover a few key points I have over heard:
1) You can donate 20 items per trip without a receipt from the organization, as long as you have an inventoried list of what you donate.
Let’s say you donate 20 items a week – that were $3 each. That is $60 a week, times 52 weeks in a year or $3,120 of items to deduct as a charitable expense. With no receipts.
This is NOT a good thing for you, in the event an audit occurs! Receipts are your friend…they have a date, time and verification of your statement. Usually, when you hit that magic “Over $500” for ANY charitable contributions you need verification…whether you did it in bite sized pieces or not. This even stands for the weekly $ you toss into the church collection.
2) You can donate items you got for FREE and claim the full amount.
Currently, according to the codes, it looks like you can write off the face value of what you donate, even if you didn’t pay that much. You could turn in a receipt as proof that this is $3,200 in groceries even if that same receipt says you paid $50 and still you get the write you would for a donation of $3,200. Again, this might not hold up in your favor under an audit as you are claiming money that you never spent.
3) You can duduct the fundraising items you buy like Girl Scout Cookies.
Again – gray waters.
You aren’t making a contribution – you are buying something and the organization supplying them with that item is making the contribution. You buy the cookies for $3.25 and the cookie people give the scouts that $.50 — again, not helping you out. This goes for almost every school fundraiser too. Now, if you gave the scout troup a check for $10, no cookies involved – that would clearly count for you.
If you really want to claim the contributions on your taxes, stick with the $50, get a form from the agency you donated to AND staple your receipt to it. You can now verify what you spent, what you donated, claim it on your taxes and feel good about helping others.
If you have a tax person that you trust – ask them. I LOVE my CPA and value the opinion/answer I get when I call with that random question.
Personally, I let it go. I don’t do it for me, I do it for others.
What are your thoughts?