As a taxpayer, you may be entitled to deduct the Fair Market Value of deconstructed materials and/or personal property that you have donated to a 501(c)3 non-profit organization or government entity on the 1040 Schedule A - Itemized Deductions. A corporation can also take advantage of this program by similarly pursuing a deduction on their 1120 return. In either deduction scenario, a donor must seek advice from their Certified Public Accountant, tax attorney, or tax professional regarding the deduction with regard to their basis in the assets, holding period, and any other relevant situations pertaining to their specific tax considerations.
IRS guidelines require donors to obtain a qualified appraisal produced by a qualified appraiser if the Fair Market Value is greater than $5,000. These appraisals must be produced conservatively, accurately and in-line with all IRS codifications and relevant case law. For information on penalties you could incur by using an unqualified appraiser, please email info@thegreenmissioninc.com or refer to the following IRS codifications:
For an individual to take a deduction for donated personal property they must Itemize Deductions on their 1040 Schedule A. “Itemizing” is less common now that the standard deduction has been raised significantly. However, donating charitable contributions may overcome the standard deduction hurdle and allow itemization. Under the TCJA, the “Charitable Contributions” deduction has become one of the only malleable deductions due to the limitations imposed on the other deductions including:
Healthcare Expenses
These expenses must exceed 7.5% of Annual Gross Income (AGI) and for most families, these expenses do not meet threshold.
State and Local Taxes (SALT)
This is currently capped at $10,000, meaning taxes paid in excess of this threshold are lost forever and cannot be used as a deduction.
Miscellaneous Itemized Deductions
These deductions, which were heretofore subjected to a 2% AGI floor, are eliminated.
Monetary Charitable Contribution
Limits have been raised to 60% of AGI with a 5-year carry-forward. Non-monetary contributions remain at 50% of AGI with a 5-year carry-forward.
Additionally, the limit on overall itemized deductions has been suspended. A taxpayer may now realize potential tax benefits while contributing to the green model, which is critical to the missions of nonprofits, government entities who use these donations as well as to the environment as carbon emissions are mitigated by reusing and repurposing material and property. In the past, higher income taxpayers started to see their total itemized deductions phased out at a rate of $313,800 for MFJ, $287,650 for HOH, and $261,500 for Single. This phase-out is suspended, meaning donations of building materials and personal property can be implemented as a smart tax-planning strategy for those who can overcome the Standard Deduction threshold and itemize.
Learn more by visiting this informational resource:
Instead of taking advantage of a broken system, The Green Mission Inc. works with green industry leaders and appraisal standard boards and other relevant decision makers to insist upon raising the bar across the appraisal industry. We work to promulgate appraiser..
Read MoreThe Green Mission Inc. is headquartered in beautiful and historic downtown Fredericksburg. Our office embodies our mission with secondhand furnishings and decorations courtesy of Goodwill and Fredericksburg's Habitat for Humanity ReStore.
