Morris Armstrong, EA

You should donate to charity because you want to.  The tax deduction is secondary, but this is about taxes and not about an entry path to heaven.  You must itemize in order to take the charitable deduction.  

You can donate cash.  That can be in the form of a check, cash, electronic payments or credit card.  The date of the donation is the date that you mail the check or that the charge appears on your credit card statement.  You MUST have a written acknowledgment for donations more than $250 and the acknowledgment must state that no goods or services were exchanged for your donation.  

If you donate $300 and receive a CD for your contribution, you will likely get a receipt stating that you gave $300, received a CD worth $75 and will be able to claim $225.

You can also donate appreciated securities to a charity and that is a bit more complex.  You will instruct your broker/advisor to transfer 100 shares of stock “X,” and will be able to deduct the market value on the date of transfer.  This is very useful if you have a stock that has greatly appreciated because you do not have to worry about paying the tax on the capital gains.  I have seen people donating a stock where their basis was only 6% of the value, and that saved them a fair amount of tax.

You can also donate goods.  We all have gone through our closets and homes and found out that we have good clothing that we no longer want, or we have bought new furniture or household goods and do not need a second set, and decided to give them to a charity.  The organization will issue you a receipt that they date and sign, and likely, that is it.   You will list what you donated and assign a value.  That set of dishes that you bought five years ago for $100 is no longer worth $100.  According to some guides, a plate is worth about $1.50. 

I suggest that you create a list in a spreadsheet and snap photos of the material that you are donating.  The spreadsheet makes it easier to value and the photos may be helpful if questioned.


Contact us and we will send you a free guide that may help you determine the value of the donated goods.

Tax PREPARATION and REPRESENTATION