Phillips: Non-cash contributions can help cut tax bill

Phillips: Non-cash contributions can help cut tax bill

April 14th, 2012 by Ellen Phillips in Business Around the Region

Some folks who're finishing up their tax returns have recently asked about tax deductions for giving to charity. As most of you know, non-cash items are legitimate deductions; however, certain rules must be followed for Uncle Sam to accept your offerings.

• For items less than $250, you'll need a receipt from the acknowledging organization. Check "Ways to Give" at www.salvationarmyusa.org to figure the fair market cost of your items.

• The charity's letterhead must accompany your tax returns with a description of the donated items that range from $250 to $500 and proof that you didn't receive any payment.

• If your donations vary from $501 to $5,000, you must attach proof about when each article was inherited or purchased and an estimate of its original value. Obviously, a copy of a receipt is best.

• Experts' appraisals, and certified folks at that, are necessary to claim values over $5,000.

• Before readers shake their heads and turn away, it's truly amazing what amounts we should place on items we give away and what costs we actually assume they're worth. Leg work is necessary here to discover the true value of our contributions. According to the Salvation Army's website, men's suits in good condition, for example, are valued at $60; a working color TV can go for as much as $225; a bike for $80, and the list goes on and on. Don't cheat yourself.

Tax Tip: Congress created a $5 million gift and estate tax exclusion. This year wealthier readers can gift or bequeath not only an unlimited amount to your spouse, but also an additional $5 million to non-spouse beneficiaries. Between husband and wife, a minimum of $10 million can go to each kid. (We should all be so lucky.)