While many of us have been consumed by news of the 2012 election, we’re all sobered by the devastation of Hurricane Sandy and are counting our own blessings. If you plan to help out, keep in mind some of these tips for making the most of your storm relief donations.
• You can deduct up to 50% of your adjusted gross income for cash gifts to “501(c)(3) organizations” or public charities working on behalf of storm victims.
• If you give more than $250, you’ll need a written receipt dated no later than the filing date of your return.
• Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. Consider buying software, available at any office-supply store, for tracking your gifts and their value. You might be surprised how much you save!
• Congress and the IRS have cracked down on inflated car and truck deductions. If you give away a vehicle, you can deduct its fair market value only if the charity uses it for “exempt” purposes (such as a church using a van to drive parishioners). If the charity sells the vehicle, your deduction is limited to the charity’s actual proceeds. If you claim more than $500, you’ll generally have to attach a certification to your return that states the vehicle was sold in an arm’s-length sale and includes the gross proceeds from the sale.
The IRS cautions all of us to seek out qualified charities, and warns of unscrupulous operators looking to take advantage of our generosity during a time of crisis. The IRS has also issued Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, for those who want to contribute or form a new charity. For more information, call me at 610-440-4049.