Maximize Your Noncash Charitable Contribution Deductions through Proper Documentation

impractical, as in donation of items at an unattended dropbox.

If the contribution is $250 to $500, you need a written acknowledgement including a description of the item(s) donated and whether you received any goods or services in exchange for the contribution.

If the contribution is more than $500 but under $5,000, additional documentation is required. In addition to the information needed for contributions under $500, you also need records describing how you received the property donated (purchased, inherited, etc.), and approximate date you received the property. Cost is required for items held less than a year, but for items held over a year cost is only required if available. So as long as you are donating items held over a year, you do not have to provide a cost.

Similar items are combined during the year to determine whether your deduction is $500 or more. If a single item or group of similar items is more than $5,000, you are required to have a qualified written appraisal.

The phrase “similar items” refers to items in the same generic category. The IRS has defined those categories in IRS Publication 561 as stamp collections, coin collections, lithographs, paintings, photographs, books, land, buildings, clothing, jewelry, furniture, electronic equipment, household appliances, toys, everyday kitchenware, china, crystal, or silver. Combining donations of multiple similar items into the categories prescribed by the IRS will enable you to maximize your deductions without the need for a qualified appraisal.

For example, if you made multiple donations of clothing totaling $4,950 and multiple donations of jewelry totaling $4,950 throughout the year, you would have a total of $9,900 in donations. However, withouta sorting the donations into the two categories, clothing and jewelry, you would be left with $9,900 of similar items and no deduction without a qualified appraisal. By categorizing the donations, you are able to deduct the entire amount since the similar items are under $5,000 and avoid the need for a qualified appraisal. The key to maximizing your charitable contributions deduction is good recordkeeping throughout the year to ensure that no group of similar items is over $5,000 and requires a qualified appraisal.

Consult your tax advisor to address additional planning opportunities before year-end to plan for additional tax benefits through charitable donations.

This article is not intended to provide tax advice. You should always consult with your tax advisor about your specific circumstances. D you arrive and thank them when you depart.

Hostess Gift

If you are invited to a social gathering or party, it is a respectable and nice gesture to bring a hostess gift. You can go with something traditional, a nice scented candle or a Mason jar cookie mix. Or shop locally and share the love of your northern roots. A picture book of Lake Superior. Chocolate covered agate candies. A Gaelynn Lea CD. Lake It, an all things northern roots store located in the Miller Hill Mall is the perfect place to find something that speaks of the Twin Ports.

What not to bring: unless worked out ahead of time, do not bring food or drink. The meal and drink for the gathering is already carefully selected and worked out ahead of time. If you show up with a dish, drink or dessert, the host will feel obligated to serve it. Also, only bring a bouquet of flowers if they are already in a vase.

No Cell

Put the cellphone away, or better yet, leave it at home or in the car. The exception is if your children are with a babysitter. Then keep it on vibration mode and only answer if it’s emergency.

Thank You!

Send a thank-you note. Yes, it’s old school. No, it’s not corny. Your host went through a lot of work to make the night a success including cleaning, shopping, preparing a meal, and more cleaning. Take five minutes to write them a well thought out thank-you note. Mention something specific you especially enjoyed about the night. Was it the food, conversation or decorations that stood out to you? Personalize it and thank them for the invitation.

The holidays can be a busy and stressful time of the year. But by following these tips, you’ll leave a lasting impression. D