Tax Saving Tip #1: Donate Stuff You Don't Need

In yesterday's post I suggested selling stuff that you don't need to make some extra cash. You may find that some of your stuff is just unsellable (like those old 'N Sync CDs) so you should go ahead and donate it to a worthy charity. Not only is this a great way to help out those less fortunate than yourself and reduce clutter, but you can also get a tax deduction for donations to qualifying charities.  Here are a few key points to be aware of if you want to claim the deduction:

• You must be eligible to itemize your deductions.
• The donation needs to be to a qualified tax-exempt organization.  You can determine if an organization is qualified by searching Publication 78 on the IRS website.
• You can deduct the "fair value" of the property donated.  For used clothing and household items, the fair value will generally be a lot less than what you originally paid for the items.
• Keep records of your contributions.  Many charities provide receipts for donated items, so file these somewhere safe. Refer to Publication 526 on the IRS website for more information on the documentation required to substantiate your contributions.
• You will need to complete IRS Form 8283 if you wish to claim a deduction for noncash contributions that total over $500 for a particular year.
• Your donation deduction cannot exceed 50% of your adjusted gross income for the year.  

You have until December 31 to donate if you want to claim the deduction in this tax year.  So go ahead and donate to your favorite charity.  Who knows, your contributions may even help brighten up someone's Christmas!