Too Much Candy, That Old Banana Costume and Your Taxes
October 17, 2012 : Matthew Staub - Past Contributor
Are you one to grossly overestimate the number of trick-or-treaters headed to your front door every year? If you’re left with a post-Halloween house full of fun-size candy bars, depleting stores of willpower and a tummyache that lasts through November, there’s a solution: donate the extra candy to a charitable organization who might be able to use it. You may even be able to deduct the value of the candy!
We turned to Lynn Wilson of The Tax Institute at H&R Block for some clarity on Halloween charity.
Block Talk: If I take my leftover Halloween candy and donate it to a charity, is my donation tax deductible?
The Tax Institute: Yes, the basis in the donation is deductible if you itemize and get a receipt from the organization.
BT: Does it matter which charitable organization I choose?
TTI: Yes, you can deduct your contributions only if you make them to a qualified organization. You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or go to IRS.gov and search the Exempt Organizations Select Check. This new online tool will enable you to search for organizations eligible to receive deductible charitable contributions. You can also call the IRS to find out if an organization is qualified.
BT: Is there a limit on the deduction based on my income?
TTI: If your total qualifying contributions for the year are 20% or less of your adjusted gross income, you won’t be limited in your tax deductions. If you are, however, a big giver, you may have a limit on your total charitable deduction for the current year. The amount of the limit is depends on your adjusted gross income (computed without regard to any net operating loss carryback), and the type of organization.
Contributions of cash and noncapital gain property (such as household goods and clothing) to 50% charities cannot exceed 50% of your adjusted gross income. 50% charities include schools, churches, hospitals, government entities, and other nonprofit organizations for charitable, religious, educational, scientific, or literary purposes.
There is also a 20% and 30% adjusted gross income limitation for other contributions and to non 50% charities, such as veterans organizations, fraternal societies, non-profit cemeteries, and certain private non-operating foundations.
Remember when you dressed as a giant banana for Halloween and thought it was hilarious but now you have a big banana costume taking up big closet space? Pay it forward. Pass it on. Donate the costime so that someone else may be a banana this year.
BT: If I donate a bunch of old Halloween costumes to a charity drive, what can I deduct?
TTI: The smaller of the fair market value of the old Halloween costumes or what you paid for them are tax-deductible if you itemize, they are in good condition or better, and you get a receipt from the organization. This means you should take a picture to prove the costumes were in good condition and keep the picture and the receipt with your tax records.
So, go ahead and buy too much candy in anticipation of the big night. You can donate it to a charity — just make sure the organization actually wants the candy before you show up with bagfuls of goodies.