I tell them to keep the individual donations below $500. The benefit is by keeping it below $500 you don't have to complete columns D, E, or F on the 8283. So that eliminates date acquired, how acquired, and basis.
The item I have the hardest time with is the FMV. I haven't broken my clients just yet. They often donate a bag of used clothing and want a deduction for the full retail price they paid 3 years ago. I have taken more than one client to value village as a training aid (just to shock them in how little stuff actually sells for). It depends on my mood a bit on that.
I also yell at them every year about not having real documentation. I mean everyone's phone has a camera in it anymore, so there's no excuse not having photos of what you donated.
For the times I have to complete D, E, F, I'm sure I do like many. Estimate a date, assume it's all purchased (unless there's substantial items in there that we know weren't), and guess at cost.
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Non Cash Charitable Donations
The last post about "Various" reminded me of something I've been meaning to discuss.
So we all have the same scenarious I presume. Client donates 'x' # of bags of clothes to their local charity & get a receipt. Of course the receipt is 95% of the time blank. On Form 8283 we have the ridiculous columns:
Date of Contribution: Okay - That's an easy one.
Date Acquired by Donor: Seriously - There's 247 items. I mean I have them pick an average.
How acquired by Donor: 99.99% of the time - Purchased
Donors Cost or Adj Basis: Really - My clients look at me like - Are you kidding?
Fair Market Value: Much easier the past few years with various sites & software but
how do you handle this?
Method Used: Again, easier - I put down the sites the clients used to figure their
values (Its Deductible, Salvation Ary, Good Will, etc.
How do others handle this? Also on the cash end. Do you require any type of proof?
Though I do have some now getting well trained and pleasantly pleased with their results,
It's usually a hastle to get clients to follow a good routine. I feel many clients are cheating themselves out of some great donations expenses. I send email reminders during the year to follow these simple rules:
1) Before stuffing items into the bag(s) - Write down what they are - Just keep a talley
12 jeans - 4 dress pants - 2,187 rock t-shirts, 4 pairs of socks that don't match -
you get picture.
2) Lay them out on the floor or bed and take a digital picture.
3) Place clothes neatly (haha) in the bag(s).
4) Create itemized list of clothes and all other items donated.. - No $$ values yet.
For non clothes be as specific as possible and take pictures to show quality.
5) Take them to charity site and when you get 'their paper' - Ask the person in charge to sign
your itemized list and date it to verify the items received.
6) Look up at your leisure the values on the web sites provided and document same. Print
copy of value page from web site and put with taxes.
This work - that may take two hours or less can make a huge difference on their return. Few years back I cleaned house - basement, etc. Couch - Dining room set - TV- BILLIONS of clothes (I have 4 kids that are [of course] no where near each other in size for hand me downs). - I was conservative and took an almost $4,000 non cash. that made more than $1k differnece in my taxes. Now if a few decent hours isn't worth $1,000 to you - I don't know what is!
I even thought of offering a service to do things like that -- Help clean out / donate the goods. For a fee which would most likely be re-couped when they did their tax returns.
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