It can be tough to be single on Valentine’s Day. Everywhere you look, there are roses, chocolates, and cutesy cards touting the benefits of being in love. And, let’s face it, it’s impossible to get a reservation for dinner.
It’s especially tough when you’re single – and not by choice. What’s a broken-hearted Valentine to do? A Sarasota area Goodwill has your answer: make yourself feel better by donating your ex’s stuff to charity. That way, according to Goodwill, you can turn bad memories into good ones.
Even better? Your newfound relationship therapy might qualify for a charitable deduction. In otherwise, you might actually get a tax break following your own break.
But there are some rules. There are always rules when it comes to tax.
First, you need to own the property in question. That can be tricky to figure out after a breakup.
Here’s the easy part: old Christmas and birthday gifts, DVDs and CDs (yes, I’m dating myself), and that sweater that your ex bought you that you never really liked to begin with? Those belong to you.
Ownership can be complicated when the property is commingled. Generally, if you purchased property together, it belongs to both of you. However, if after buying property together, you both agreed that you would retain ownership of the property (your ex yelling “Fine, then keep it!” works, as does a more civil discussion), then the property is yours to do with as you see fit. If the split of joint property isn’t quite so clear, you’ll want to clarify whether you have the right to dispose of the property – unless the property has been abandoned.
Property that has been abandoned property may be fair game. If jointly owned property – or property that you purchased – is left behind, you may be able to claim it as your own. But you’ll want to use some common sense: abandoning a toothbrush and some old underwear is one thing while abandoning a valuable, like a television, is quite another. Before you decide that property has been abandoned, use common sense. If you have reason to believe that your ex might want the property back, be the bigger person and reach out to offer to return the property. It may be, however, safe to assume that the sweaters and paella pans are safely yours after a reasonable period of time (like, for example, when you can’t remember which ex actually owned the property).
You’ll also want to confirm that – even if your ex agrees that the property has been abandoned – you can both legally and technically transfer the property. There may be paperwork required to transfer items like a car, mobile home, or real property before you can transfer it to a third party.
If you’re not sure whether you have the right to get rid of the property, it’s best to err on the side of caution. It’s a good idea to check the laws in your state regarding the distribution of property and what constitutes abandoned property (a lawyer can help with this). And of course, there’s always Judge Judy.
Once you’ve sorted out that you have the right to make a donation to charity, you’ll want to figure out the value of the items. Typically, you can deduct the fair market value (FMV) of donated property. That’s easy when property is new or easily valued (like commonly traded stock). Calculating the FMV of used goods (like that old college sweatshirt) is more difficult. Typically, for used clothing or household goods, you can use the value that the item might fetch in a thrift shop. You’ll want to use your best judgment to value the items if they’re less than $500 and in good used condition or better (appraisals may be necessary for any single item of clothing or any household item worth over $500). If you’ve taken out your relationship frustrations on that old teddy bear (you know, the one that’s now missing an arm), it’s worthless – and not eligible to be donated.
If you’re thinking of donating jewelry, it’s almost always necessary to get an appraisal from a specialized jewelry appraiser. The appraisal will need to state the style of the jewelry, the cut and setting of the gem, and whether it is now in fashion. It’s worth noting that sentimental personal value has no effect on FMV – which is probably just as well when it comes to your ex.
The same goes for paintings, antiques, and other objects of art: you almost always need a written appraisal from a qualified and reputable source, unless the deduction is $5,000 or less (that painting of kittens is probably safe). If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the signed appraisal to your return. My guess is that isn’t something that’s been left behind after a breakup unless you’ve been dumped by the likes of Warren Buffett or Mark Zuckerberg,
For more on determining the value of donated items, check out IRS’ Publication 561 (downloads as a pdf).
Finally, to claim a tax deduction, you must make charitable contributions to qualified organizations.
Goodwill certainly qualifies. (To contact the Goodwill Manasota, click here. To find a Goodwill near you, click here.)
If you’re not sure whether an organization is qualified, you’ll want to do your homework first. You can search online at the Internal Revenue Service (IRS) website using IRS Exempt Organizations Select Check. You can always confirm an organization’s exempt status by asking to see the organization’s IRS determination letter (many organizations will post the letter on their website) or by calling the IRS at 1.877.829.5500. Keep in mind that churches, synagogues, temples, and mosques are considered de facto charitable organizations and are eligible to receive deductible donations even if they’re not on the list (some exceptions apply so be sure and ask if you’re not sure).
Of course, to claim the charitable deduction, you must itemize your deductions. You generally claim itemized deductions when the value of those deductions exceeds the standard deduction. For more tips on charitable giving, click here.
And there’s one more rule. It’s not an IRS rule and it’s not a Goodwill rule. It’s a relationship rule: you shouldn’t be allowed to donate property when you’re the dumper – only when you’re the dumpee. The other way around is just wrong. This, per NPR’s Mo Rocca who noted on Wait Wait…Don’t Tell Me! that it’s verging on cruel to suggest “I’m sorry I dumped you, but I needed to deduct you for my taxes.”