With Christmas behind us, the countdown to the new year is now on. It's also the time when many people consider making year-end charitable donations, whether it be money or property.
A handful of gifts are given in the holiday spirit, and some of those gifts provide tax deductions for people. “People always call and want to know how much it's going to save them if they make a donation to their church or charity, is it beneficial to donate a car, or other property, usually at the last minute between Christmas and New Years, where they are trying to do it at the last minute,” says Rich Cullar, a CPA at South Bend’s Cullar & Associates.
Cullar says giving for a tax deduction is most beneficial to those who itemize. He says there are some tax law changes to keep in mind. The big one for 2006 and 2007, individuals over 70 1/2 can donate up to 100-thousand dollars per year directly from their retirement account. “They don't get a deduction for the amount from IRA to charity, but they never pay tax on that distribution,” says Cullar.
In terms of writing things off, Cullar says sometimes people are better off selling things on their own and getting the cash back for it, instead of getting the value under their tax bracket. “So if you donate some goods worth $100 and you're in a 15% bracket, you've only reduced your taxes by $15, where as if you sold items in a garage sale, you'd have $100.”
Meantime, donations of clothing are up this week at Goodwill in South Bend. “A lot of people will get the tax forms to fill out for doing the long form on their taxes, some people don't want them, but then a lot of people do,” says Sandy Scheibelhut, a Manager at Goodwill.
Also, starting in 2007, a new rule says every donation, no matter how small, must have a receipt in order to deduct it on a tax return.
If you’d like to research a charity before donating, there are a couple of websites to check out: www.guidestar.org and www.give.org