I have a new holiday rule: Old and discarded toys and clothing need to get donated to charity before new replacements can enter my home. My plan has two benefits. First, I'll get rid of clutter while helping others. Second -- and not to be forgotten -- I'll get to lock in some tax deductions for 2010.
Do you also have old toys, clothing and other items you'd like to donate before the end of the year? Here are some rules to keep in mind so Uncle Sam doesn't doubt your generosity and question your deductions:
- First, the IRS will only accept donations for clothing and household goods that are in "good used condition". That means you can't just indiscriminately deduct all of your kids' toys. You need to make sure the games have all their pieces and that your toddler didn't use a book's cover as a teether.
- The key to claiming your donations is to make sure you get a receipt with a value written on it. If the charity asks you to estimate the property's worth on your own, the Salvation Army's valuation guide can help you.
- There's no shortage of worthy charities to donate to during the holidays. Just make sure that the one you give to is qualified to receive deductible contributions. You can find approved organizations on the IRS website. Keep in mind that many churches, temples, synagogues, mosques and government organizations do qualify even though they may not be on Uncle Sam's list, according to Grant Thornton, a group of independent tax advisory firms. But you can't write off donations to your favorite political group that participates in campaigns or tries to influence legislation.
- Finally, if you plan to donate a piece of property worth over $500 you'll have to fill out IRS form 8283. If the gift is in excess of $5,000 (other than publicly traded securities), you must complete the appraisal summary on that same form and have the charity sign and complete a section of it as well, according to Grant Thornton.
Are you planning on donating any toy this year? How do you convince your kids to part with them?
Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
Toys, Toys, Toys image courtesy of Flickr, CC 2.0.
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