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December, 2003
Last chance for tax write-offs for charitable donations
Happy Holidays!
It's the end of the year and the last 4 days of the month
you will hear lots of advice about financial actions to reduce the amount of
taxes you pay for calander year 2003. Along with financial contributions to
charities, you can also donate items like computers, and take a tax write-off.
One of the ways to reduce the amount of income tax you owe is to give items of
value to charitable nonprofits, take a deduction, and save on taxes or increase
your refund. Get rid of those items you have lying around taking up space that
you may never use again and turn them into cash!
Charities (non-profits) issue a charitable receipt claiming they received your
item(s) but it's up to you to place a value on the item. But don't claim wildly
inflated values because it is the donor's responsibility to support the value claimed.
Our advice is always consult your tax adviser (CPA, Enrolled Agent, etc.) to make
sure you are doing the right thing for your tax circumstances and valuing the item
in accordance with the law. When donating to an educational nonprofit, there are
additional federal deductions and credits passed by congress, and in some states laws
were passed to mirror the federal laws. An example is the 21st Century Classroom Act.
As this was explained to me, my understanding is that this law allowed a deduction
equal to 150% the current fair market value of the donation. It was further explained
to me this deduction was available even if the item had been fully depreciated. Please
check with your tax adviser when preparing your taxes to ensure you take the proper
deduction(s).
So How Do You Determine The Value Of Computer Stuff You Have To Donate???
If you are an individual looking to determine the value of your item, one way is
to look in your local newspaper in the classifieds. See what computers that sound like
yours are being advertised for and cut out the part of the page with the ad and the date
at the top of the page.
If you are a business you must determine if you have been depreciating the item.
You may prepare a letter with the inventory and value you claim, and the nonprofit can
sign the letter as having received the items.
Remember, you may have a monitor that you get a charitable receipt for, and you
may have to STILL pay an enviromental disposal charge, because of state laws
regarding e-waste or hazardous waste.
Before you get rid of your computer, remember these two rules:
1. Computer equipment to donate for reuse, working or nonworking,
has a better chance for reuse if you leave all the parts in it, and,
2. Clean Off Your Files from your hard drive. A friendly way to destroy data is by using
software application programs like: Active@Killdisk, DataEraser, or WipeDrive, etc.
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