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Donating Is the Best Way to Go

You've heard about the digital divide: Schools and charities, particularly in underprivileged areas, lack the resources to offer PCs to students and the poor. Your old PC might help close the divide--and you can walk away with a tax deduction in addition to that warm, fuzzy feeling.

If you want to donate, your first step is to find an organization that needs your old PC. You may want to start close to home by contacting local public schools or charitable organizations. You can also find local groups in need of equipment through the Computer Donation Database at Share the Technology's Web site. (Charities can also post a wish list at the site for free.)

Try contacting a reuse organization such as the Computer Recycling Center in northern California. The center runs a Computers and Education program that distributes used PCs to schools. Executive Director Steven Wyatt says the company evaluates a donated computer's condition, and if it meets the minimum requirements, the company will send it a school that needs it and give you a receipt for your taxes. The current requirements dictate that the computer must be, at minimum, a Pentium-class PC or a 100-MHz PowerPC Mac.

To take a tax deduction for your donation, you need to follow some strict guidelines, according to Brian Nagle, a manager at Ernst & Young's Personal Financial Consulting Practice.

First, make sure the organization you donate to qualifies as a 501(c)(3) charity. This group includes public schools and public universities, religious groups, and other nonprofit organizations like the United Way and Goodwill.

Next, you must document the donation. The amount of paperwork you need to do depends on the value of your donation. You have to determine the "fair market value" of your PC--not an easy thing do. According to the legal definition, fair market value is the price that a willing buyer would pay to a willing seller. Wyatt suggests looking in the classifieds or on auction sites such as eBay to see how much comparable machines cost. You can also get the machine appraised at a resale shop. However you determine the market value of the PC, keep a record of your research (i.e., keep the classified ad or a copy of the appraisal).

If the total value of the donation is less than $250, you'll need written acknowledgment of your contribution from the organization you donated to. That receipt should indicate the organization's name, the date and location of the donation, and a description of the items you gave. A letter from the charity can list that information, Nagle says.

If the market value is between $250 and $500, you'll need the receipt from the organization, evidence of the original cost of the computer, and any terms you attached to the donations (if you stipulated that the PC be used by students, not administrators, for example).

For donations worth more than $500 but less than $5000, you'll have to file with your taxes an IRS form 8283 for non-cash charitable contributions. For contributions of more than $5000, you'll have to get a professional appraisal from an independent party; you can't estimate the value of the donation yourself, nor can the group you're giving it to.

While that process may seem like a lot of work, the payoff is more than just a tax refund. You'll be doing your part to help cash-strapped schools and charities move into the twenty-first century.

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