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Get Money Back for Good Deeds

Did you ever think that you would get anything back for selflessly giving things away? Besides that warm, fuzzy feeling inside, you can get cash back come tax-season. If you or your company has been in the giving mood this past year, I have a business accounting tip for you. Like everything in life, it is not so easy.

There are special forms to fill out to substantiate your charitable donations. The IRS has indicated that over 25% of taxpayers who wanted to reap the benefits of their munificence did not properly delineate their claims. Documentation is needed when giving away goods worth over $500 and donating something in excess of $5,000 may warrant an appraisal.

The IRS speculates that something close to $1.8 billion was questionably claimed in form of deductions by giving Americans. Obviously, this has raised some eyebrows at the IRS and they are a bit peeved at how gratuitously generous the public make them out to be. You can catch a tax break for being charitable, but you have to follow the rules. Closely follow the IRS guidelines to be sure that all of your paperwork is in order. Tax laws allow for a payer to deduct the fair market value of belongings if deductions are itemized. Your old belongings must qualify as being in good condition or better to qualify. This applies to old clothing, furniture and other household goods.

What to do
Who is the grand determiner as to the condition of your donations? Well, you are for the most part. If something is too shabby (even for charity) a charity will often not take it thinking it will not be able to be resold. The best protocol to follow is to get documentation from the charity and to possibly take pictures of the item in case the 'tax man' comes for you.

If donating something that is in less-than-optimal condition but still worth over $500, you can still qualify for a tax deduction. Things of minimal value will not apply, but small things can add up to a decent amount of money; so, do a good job of your spring cleaning.

Keep receipts for anything donated coming to a value of $250 or more. Remember, that anything exceeding $500 warrants filling out a special form. You will be requested to name the charity, the date of the donation, the cost of purchase, and its appraised value. For anything over $5,000, you will need a written appraisal.

Some exceptions apply. You can only deduct donations amounting to less than either 50% or 30% of your adjusted gross income. It is 50% for cash and property donations and 30% for property that has appreciated in value.

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