For the average person, there’s nothing more terrifying than the thought of getting an IRS audit. It ranks right up there with fears of dentists, flying, and fear of heights.
Goodwill donations are great. So are donations to a non-profit. They are made for a good cause as the items you donate help families with less means and help the local community in so many ways.
However, if your charitable contribution is disproportionate to your income, it raises a red flag with the IRS. That’s because the IRS is seemingly omniscient and knows just what the average charitable contribution is for someone in your tax bracket. They have historical records on donations and it’s a very simple calculation that may trigger a red flag is you exaggerate.
Claiming tax deductions for the full retail value of the item, rather than the resale value of the item is also an IRS no-no. It is a good idea to get an appraisal for the value of all donated property.
What can you do to decrease your risk of raising this red flag?
• Avoid giving more than the average for your income bracket.
• Don’t forget to keep accurate records of your donations as well.
• Photographs of donated items are wise as well in case questions arise at a later date.
If for some reason you have gotten a notice from the IRS already, we can help. Simply call 305-728-5109 or 305-231-2150 and ask for Andrew Brody. We are a certified CPA Firm that’s been operating in the Miami area for over 65 years.