How to Claim a Charitable Donation of Equipment
The donation of equipment from your business or home office can be beneficial to a number of people. This charitable action can help an individual get his business idea off the ground or keep a non-profit organization equipped with the right machinery. You can claim a charitable equipment donation on your tax return to get a final benefit out of these items.
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Things You'll Need
- Schedules A and B
- Sales agreement from charity
- Appraisal
- Form 1040
- Photos of equipment
Instructions
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Ease Your Income Tax Burden With Equipment Donation Claims
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1
Keep receipts you receive for equipment donations that are worth less than $250. Each receipt must have an itemization of each piece of equipment as well as a total value to accompany your tax return.
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2
Work with your favorite charities to get a copy of their sales documents for auctions or final sales to their constituents. You need these documents if the charity's original intention is to sell the vehicle because they indicate the claim amount you can use.
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3
Compare the charitable organization's tax status and history with the Internal Revenue Service's criteria for legitimate charities. You can only claim donations to a non-profit charity that is providing a public service for the community. Specific charities that are legitimate include animal-protection agencies and veterans groups.
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4
Relax your tax burden in future fiscal years by carrying over the value of equipment donations into proceeding years. You can claim the value of donated equipment up to a certain percentage of your income and distribute the excess over the next 5 years.
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Follow up with the charity to determine how it is using the donated equipment. You may be able to get tax benefits in subsequent years if the equipment is used for disaster relief, government service or other special circumstances.
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Specify your equipment donations on Schedules A and B as provided by IRS.gov (see Resources below). This form allows you to outline different donation categories among other deductions made against your annual income.
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Tips & Warnings
Acquire a written statement from the recipient of your equipment donation. This statement should indicate your total donation of cash and equipment as an itemization of donations. Charitable donations are often a red flag for IRS auditors, so a written statement can help you stave off penalties.
