A reader e-mails:
Hi there Brent, Nice story in the Sundays paper. We will be looking for all the tax breaks we can get this year. One of those is our donations. We have donated a lot of stuff to Goodwill and we have the cards they gave us. We had a garage sale and took pictures of everything before boxing the stuff up.
My question to you is, what is the maximum amount you can donate dollar wise? Also, is that amount the total or is it that amount for each place you donate?
It's Only Money answers:
Your total donations to charities -- cash and noncash -- can equal 50 percent of your adjusted gross income. Anything above that cannot be deducted in the year you donate. However, you can deduct your excess donations on next year's return. In fact, you can "carry forward" excess contributions for up to four more years beyond the year you donated.
Remember, adjusted gross income isn't your total income. It's your income minus deductions that you don't have to itemize. It's the amount you enter in lines 37/38 on
A different limit applies to donations of stock or other properties with long-term gains. In those cases, you can only deduct the fair market value of those gains up to 30 percent of your AGI. There's a way around this, but that's not what you're asking so I'll skip it.
Jim Jurniski, a CPA and tax attorney in Portland, cautions that people often overstate the value of donations to Goodwill, which seldom gives an itemized receipt. The Salvation Army provides a donation value guide ; I referenced a guide from Goodwill in my weekend column.
"Also," Jurinski notes, "if a taxpayer claims a deduction of more than $500 for all contributed property, the taxpayer must attach IRS Form 8283. Noncash Charitable Contributions, to the form 1040."
Lastly, in terms of cash donations, if you write a check for more than $250 to any one organization, you'll need to keep a receipt or evidence of the check in your records in case of an IRS audit.
Read It's Only Money's past tax-related posts. or e-mail questions. Weigh in on It's Only Money's poll on tax planning.