|Charitable Contributions Tax Law Changes|
ItsDeductible has been updated to reflect the provisions of the Pension Protection Act of 2006, which does not allow a tax deduction for clothing and household items not in good used condition or better. The new law took effect August 17, 2006.
This means if you donate any clothing or household item after August 17, 2006 and the item is not in good used condition or better, you will not be able to claim a tax deduction for the item. You will still be able to claim a deduction for the items if you donated them on or before August 17, 2006.
ItsDeductible has three value categories to help you assess the fair market value of your donated items: High, Medium and Low.
Typically, "low" value is a key indicator that a donated item was of less than good used condition, which means clothing and household items of low value would not be deductible items under the new tax law. The IRS may also deny a deduction for any item with minimal monetary value, such as used socks or underwear.
To avoid an inadvertent violation of this new law, ItsDeductible will not allow you to make any entries for clothing and household items in the Low value column if your donation is after August 17, 2006. However, you will still be able to enter items of Low value if you donated them on or before August 17, 2006. See value definitions.
While ItsDeductible provides the fair market value of comparable items, it does not value your specific item. It is your responsibility to determine if your item is comparable to the examples in ItsDeductible, or if there is a better indicator of its value for donation purposes.
The Pension Protection Act of 2006 does not allow a deduction for any monetary contribution unless the donor maintains a record of the donation, which should include a bank record or written communication from the charity. The documentation must include the name of the recipient's organization, the date of the contribution, and the amount of the contribution. This change affects donations made in 2007.
This means that any money donation you made on or after January 1, 2007 requires the following documentation:
Keep this documentation with your personal records.