You are SOL WRT the cash donations, unless the church provides you with a statement saying “no goods or services was received”.
A lot of times, I take stuff to the goodwill store and they give me a receipt. They don’t itemize it–they just sign and date it. Well, I value each of those receipts at $499 (because you have to have an appraisal done if it’s over $500). So if you have 10 receipts, that’s $4,990 worth of donations, which is about $1,250 at 25% marginal tax bracket.
Also, if you pay cash for a new item and then donate it, that’s as good as a cash donation. (EG - I got an “angel” off the tree at the local church, and bought $200 worth of stuff for that poor kid. That’s a $200 cash donation, as long as you can substantiate it.)
Most charities are “50% charities”. You can deduct 50% of your AGI toward 50% charities. IE - You can’t have more than 50% of your AGI as a charitable contribution.
Some charties (VFW, Masons) are “30% charities”.
And if you contribute capital gain property (eg - securities) to a 50% charity, there’s a 30% ceiling. If you contribute capital gain property to a 30% charity, there’s a 20% ceiling.
Any excess charitable contribution can be carried forward for five years.
Yeah, so I can cut down 50% of my income tax by dropping off some socks at goodwill everyday. Maybe I need to make a move down to your $40k school land of opportunity.
Anything over $500 requires that you fill out form 8283 and attach a description for the donated property. (Usually, “kitchen items” or “bedding and towels” will suffice.)
Anything over $5,000 requires an “appraisal summary” on Form 8283.
Anything over $500,000 requires a “qualified appraisal” on Form 8283.
So IOW, if you want to stay under the IRS’s radar, I wouldn’t try to deduct any more than $5,000 in any given year.
^In theory, if you had 150 tickets (and you valued them at $499 each) and they were all for “used clothing”, then you should treat all tickets as one contribution (for $74,950) and you’d have to have an appraisal summary done. (Because you’re supposed to group together all like items.)
You could stretch this a little, and try to put them all down as separate donations on Form 8283. If you can get away with it, good on you. But if the IRS sees that you donated $75k of clothes last year, they’re probably going to start asking questions. And if you can’t prove it, you lose it. And you get to pay penalty and interest on the lost deductions.
EDIT - and let’s be honest, if you drop off a plastic shopping bag of old clothes and value them at $499, you’re already pushing it. While I do encourage people to take advantage of every deduction that they are entitled to, some things go a little too far.
So what if I say I throw in $3/week for example and deduct a total of $150. Would that tip a storm IRS audit (by non other than Stormyhotel)? And will throwing down $249 be ok since I have no receipt for the clothing, goods, and other ish I donated?
@Higgs - It’s still deductible to you, but deductions to those charities can’t exceed 30% of your income (as opposed to 50% for most charities.).
@CvM - You can deduct $250 (cash or noncash) with no questions asked.
Honestly, if you took a deduction for $250 cash and another for $450 for used clothing, the IRS probably won’t ever call you. The only way you’ll lose the deduction is if they audit you and disallow it. (Odds of this happening are pretty small.)
It just occurred to me–you said that you just started a new job teaching finance at the local hacksaw junior college. That will undoubtedly be a Schedule C business.
When you have a Schedule C business, you can deduct certain things that you wouldn’t ordinarily be able to deduct. EG - your computer, which you used to use for watching internet porn, is now a business asset. (Powerpoint slides don’t create themselves, do they?) All the stuff that you buy at Office Depot (if you don’t steal it from your employer first) is now “office supplies”. The entire trip that you took to Texas (assuming it was “ordinary and necessary”) to meet up with your old colleagues is now a business trip.
Also, some expenses that formerly had a 2% floor can now be business expenses, like tax prep fees. Last year, they were subject to 2% of income, but now they can be deducted in full on Schedule C.
Of course, you can’t go overboard. You can’t deduct your strip club bill as “employee benefits”, or your Lamborghini as “vehicle expense”. (Remember the “ordinary and necessary” rule.) But if you can justify it and you think the IRS won’t argue with you, then deduct away!
Also, remember that you can deduct 25% of your self-employment earnings as a SEP IRA. So if after taking all the deductions you can, you still made $10,000 on your Schedule C business, then you can put another $2500 away in what is essentially a traditional IRA. This is in addition to your regular IRA and 401k expenses. (But your 401k + SEP IRA can’t be > $51,000.)
But…I’m a W2 employee. And, the contract I agreed to is a whoppin’ $2500 for the semester. Yes, the entire semester. If I was not such a BSD in my M’n’A’in on the Buyside position, there is no way I could do this teaching role.
More than anything I’m doing it because I care. I want to help out the non-traditional students, the forgotten students, and first one in the family to attend college, get what they need to be successful tomorrow. The students in my class because this is probably the only school they can get into. Many would not fit inside of a University given they are doing night classes around a full time work/life/family schedule to earn a bachelor’s degree.
I’m not the old dry Phd (no offense bchad) who pontificates indepth theorms on the subject matter. I’m the street smart brotha who’s droppin straight troof in the hood in a way these students not only understand, but also enjoy. So far I’ve been getting alot of praise which is assuring. The red tape on the school side is a whole nother story.
