Your 2005 Taxes
Software to Track Charitable Contributions
Contributing to charities and nonprofits does good and feels good, but coming up with an accounting of your largess for tax purposes can be painful if you made numerous donations during the year. It's particularly aggravating if you gave away lots of clothes, toys, and other noncash items to needy organizations, because the IRS isn't much help in figuring out what they were worth.
You'd think it would be. IRS Publication 561 is 11 pages long and is titled "Determining the Value of Donated Property," but good luck at—well, at determining the value of your donated property. You won't find a table displaying fair market values of lightly used sheets or women's boots or hardback books, or of anything else, for that matter. There's only a lot of language about how the market value of donated household goods or used clothing is a lot less than their original price, which is not terribly surprising.
Whether or not you use tax software to prepare your federal and other returns, the way around this headache is DeductionPro 2004, a $19.95 program from H&R Block that runs on Windows PCs (it isn't Mac-compatible, unfortunately). You enter all of your cash and noncash contributions, with dates, recipients' names, and brief descriptions, and the program tracks and organizes them.
And, whoopee, it supplies reasonable market values for a wide range of items. As you enter each item, the program asks for its condition and provides a dollar figure that goes into the donation kitty. I tried the program a couple of years ago and reported on my frustration with the limited number of products for which values were available. The database still can and should be expanded, but it handled the vast majority of goods our family gave away in 2004, and can I really expect a $19.95 program to give me the value of a wicker tabletop basket?
If you use H&R TaxCut to do your federal return, it will automatically suck from DeductionPro everything it needs to fill in the contributions section of Schedule A of Form 1040. And if you contribute more than $500 total, which requires completing Form 8283, that form will magically be completed as well.
DeductionPro is available in retail stores, or it can be ordered or downloaded from the H&R Block website (www.hrblock.com/taxes/). And here's another recommendation if you're a habitual donor: Make your entries for next year throughout 2005, and the 2006 tax season will be even easier.