New Tax Rules 2007
Toss $20 into the church collection basket last year and you could deduct it off your tax return. Effective 1/1/2007 you’ll have to write out a check or get a receipt if you want to deduct your weekly offering.
Remember when you gave a beat up dining room table to a thrift shop? If you gave it after 8/18/2006 then you can not claim it as a deduction unless it is worth $500 and you get a professional appraised prior to filing your 2006 return. Lower value stuff donated after 8/17/06 must be in good condition (take pictures to prove it). You can claim a deduction that isn’t in good condition if it is worth more than $500 and you get an appraisal. Given that appraisers charge $50-250 per hour you may be better off to sell the used stuff and donate the cash to a good cause.
Congress also gave the IRS authority to deny deductions for “minimal monetary value” such as socks and underwear, donated after 8/17/06 even if in good condition.
Cash contributions: You’ll need either a bank record, cancelled check, credit card statement or receipt from the charity to deduct any cash gift after 12/31/06. For amounts over $250 you must have a receipt from the charity (a cancelled check will not do).
Appreciated Personal Property: When you donate tangible personal property such as art or furniture you can deduct only the lesser of what you paid or it’s current worth, unless, the charity keeps and uses the item for related activities.
Beginning with 2006 returns penalties climb for charitable deduction puffery. If your claimed value is 50% or move above what IRS decides, then, you can be hit with a 20% penalty of your underpaid tax.
Hmmm! Who said it was more blessed to give than receive??