Clearing out closets and basements? Items you no longer need can be donated to various charities for the benefit of the population each serves or for resale to raise funds for the organizations. Extra nonperishables, lightly used housewares, bedding, towels, and clothing are most welcome at your local homeless and battered women’s shelters. Charitable organizations collect other items such as toys, books, and formal wear to sell at their stores to raise money for each organization’s general fund. Keep a detailed list of items donated and the fair market value of each item. Obtain a receipt and attach that information.

You can take the entire amount of your financial donation as a deduction if you itemize on your tax return. Instead of contributing cash, donate appreciated shares of stock or mutual funds that you’ve held for at least a year with the lowest cost basis. That way you can deduct the full market value of the donation without having to pay taxes on your capital gains, provided you don’t buy back with 30 days. It is imperative you discuss strategy with your investment advisor before implementing.

Check Point:

• Ensure that the organization is designated a 501(c) 3 to qualify for a write-off.
• Obtain a receipt if your donation exceeds $250. Ensure the receipt lists the amount of the donation and records if you received something of value as a result of that gift. Donations under $250 don’t have to be documented.
• Contribute the donation by December 31st.