If you will be claiming Itemized Deductions on your 2019 Individual Income Tax Return, consider what can be done to save taxes by giving noncash gifts to your church or charity.
Givers (also known as Donors) need to fill out Section A of Form 8283 for noncash gifts valued at more than $500. Section B is required to be done if the value of an item or a group of similar items exceeds $5,000.
If the gift is stock in a publicly traded company (i.e. IBM), an appraisal isn’t required since IRS can easily look up the value on the day of the gift. But other noncash gifts with more than $5,000 value require an appraisal by a qualified, independent appraiser.
If the gift is a vehicle, boat or airplane, the deduction is usually limited to what the charity sells the item for. The charity is required to file Form 8282 if the property is sold within three years.
Noncash charitable gifts have a limit on the deduction-for individuals — it’s 30 percent of Adjusted Gross Income. C corporations (pay tax) can deduct up to 10 percent of its taxable income. Excess deductions can be carried over for up to five years (for both individuals and corporations). S corporations simply list the charitable deduction on the Schedule K-1 each shareholder receives.
If the gift is artwork, the IRS Art Advisory Panel looks into the matter and determines what the value is for the charitable deduction.
The most recent information from IRS shows in 2015, $64 billion was claimed as noncash charitable gifts. Gifts of publicly traded stock totaled about $29 billion or 45 percent of the total.
The 2019 Standard Deduction for single folks is $12,200 plus $1,650 if age 65 or blind. For married filing a joint return the Standard Deduction in 2019 is $24,400 plus $1,300 for anyone age 65 and for being blind for tax purposes.
If your other taxable income in 2019 will have the last bit of income taxed at 22 percent, and your estimated 2019 other Itemized Deductions will be enough to be more than your Standard Deduction, noncash charitable gifts of $400 will save you about $88 in tax.
And, cleaning out the closets, the garage and giving the toys and sporting equipment you no longer want will give you more space to enjoy.
Did you hear “Every man is enthusiastic at times. One man has enthusiasm for 30 minutes — another man has it for 30 days, but it is the man who has it for 30 years who makes a success of life.” Edward B. Butler
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.