While tax season is still a few months away, take some time today to set yourself up for an optimal filing with Uncle Sam. Donations and charitable giving are a great way to limit the amount you owe, and you might be surprised by the types of donations that qualify.

The simplest donation is of course cash. Most non-profit charitable organizations qualify. Keep all your receipts to make sure your itemized donation deductions are accurate. In addition to cash, property donations such as clothing, books, land, and even cars qualify.

The general rule of thumb is to deduct the fair market value of the item, although the rules for donating cars have changed recently from fair market value being determined by a blue book value, to the actual price the car is sold for at auction. For donations of cash or property under $250, merely holding on to the receipt is enough to qualify for a deduction. If the donation is between $250 and $5,000, you will need to explain how you received the property, when you received/created it, and your cost basis for the deduction. If the donation is over $5,000, then you will need a qualified written appraisal of the property in addition to everything else.

Look around your home today to identify items that may qualify for a donation deduction. Not only will you be helping charitable organizations continue to help those in need, but you can hold on to some of your hard earned money at the same time.

This article is for informational and educational purposes only.  It is not intended to provide legal, tax or financial analysis.  Please consult your attorney, accountant or tax advisor if you have legal, financial planning, or tax related questions.

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