Long before “Cash For Clunkers” or “Cash For Appliances” we had Cash For Trash. Donating your unwanted things to charity is a very easy way to potentially reduce your tax liability and lead to a larger tax refund. For example, if you received a gift for Christmas this year that replaced an older item you already owned, think about donating that item before discarding it. What you consider to be junk may 1) be a much needed and useful item to someone else and 2) be a tax deduction for you. Donating to charity is kind of fulfillment because you help less fortunate people and it inspires others to help as well.
3 great ways to benefit from your unwanted things.
Here are the best three things you can do to get more value out of your unneeded / unwanted stuff.
1) Give your item to a family member or friend who you know can use it. The satisfying feeling you will receive in return for helping out someone you care about is even better than reducing your taxes.
2) List your items for sale on as many free or near free mediums as possible. The Pennysaver, Craigslist, the Green Sheet, and even many newspapers offer free advertising, within certain dollar limits. If you are simply looking to get as much money out of the item as possible you may find an individual or entity willing to pay more than the potential tax reduction value.
3) Give your item to a qualified charity. The IRS allows you to deduct the current value of your useable and functional donation from your itemized tax return. The Salvation Army provides a thorough list of typical donations and their monetary values on their website.
-If you have a unique item to donate and are unsure what the value should be listed as you can always stop by a consignment shop or auction house and ask for an appraisal. You can also use online sources – see below.
-Want to know if your charity is considered qualified by the IRS? Use the tool listed below
-Of course this option does bring more than a potential tax reduction. You are helping someone in need.
Your donation does make a difference in someone’s life – a true story.
Carl was looking for work and struggling financially. He was ecstatic to be hired as a salesman at a local appliance store. Carl worked hard every day to make the customers and his boss happy. It eventually paid off when Carl’s boss promoted him into a sales manager position!
Even though Carl smiled widely and graciously thanked the boss for the promotion he was secretly concerned about the manager’s dress code. As a manager he would be required to wear a suit jacket to work everyday. He needed at least 5 suit jackets and certainly couldn’t afford new dress clothes.
Carl went to the Goodwill store with his fingers crossed. With the store attendant’s assistance Carl was able to find enough suit jackets to meet the dress code! His bill came to $40.00 for 5 jackets. Someone’s charitable donation was going to make a big difference for Carl.
How do I make sure I am getting the full value of my deduction?
1) Be sure that you get a receipt for the value of your donation. It doesn’t necessarily have to be a formal document but you should get something in writing from the charity stating the value of the donation and the date on which you donated it.
2) Also note that, according to the IRS website, if the amount of a taxpayer’s deduction for all non-cash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
3) The IRS advises that in order to get credit for your charitable deduction you need to itemize your taxes. Have your tax advisor run some numbers before you decide whether to itemize or go with the “standard deduction”. If your deductions add up to less than what your standard deduction would be then there is no advantage to itemizing.
It is important to become familiar with all the tax deductions available to you, including qualified charitable donations. Arranging your financial affairs, around IRS approved deductions, could give you an advantage when considering your overall tax liability.
Can you turn trash into cash without the IRS?
A different way of thinking about this topic is turning someone else’s trash into your cash! We’ve discussed giving your unwanted things away but is there something you can do with the things discarded by others?
When I was a kid my dad would take my brothers and I to the rifle range in East Butler. After all the adults were done target practicing my dad would send us to the end of the range to dig out all the lead that had hit the side of the hill. We filled up small buckets each week. He took that lead, as well as the discarded brass cartridges, and used these free raw materials to mold and then reload new ammunition. He used some for himself and sold the remaining ammunition to others thus providing him cash from a bucket of lead trash.
Take a walk around your house and neighborhood. Is there trash you can turn into cash?
Mike Bowman – Bowman’s Money College
Article Source: http://EzineArticles.com/expert/Michael_B_Bowman/348817
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