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Donating Clothes and household items for tax deduction.?

  • This is my first time I would be donating clothes for a tax deduction and I need help on where to start. I have already gathered the used items I would like to give away, what do I do now? Do I make a list of each item I am giving away and give an estimate used value price? What organization should I give it to? What happens when I drop off the items? Do I give them the paper of the list i made of the estimate used price? Will they give me a receipt of the items I gave away including the price? Do they estimate it themselves? At the end of the year when I do my taxes how do I go about putting this in my tax?

  • Answer:

    You can get up to a $500 with no documentation. If you want to deduct more than $500 you do need to document each item. This information is based on the honor system until you get audited. When you donate the items, you will typically get a blank form (ie. receipt) that you complete and save for your records. Usually the charity does not keep any information about you or the specific items you donate. Less often, the charity will keep basic information on you = name/address; but you are still responsible for monitoring what you gave to them. Chosing a charity to donate to: Most large charities (Salvation Army, Goodwill, etc) get hundreds of thousands of pounds of clothes. Most of this are sold in bulk (frieght container) to 3rd world countried. I try to choose charities based on what I'm donating. The other day I gave away, slightly worn business clothes that I gave to a charity specifically for the unemployed looking for job interview clothes. A national organization is called Dress for Success; there are local charities for this too. Another place that I choose to donate to is the local VA hospital. Our hospital has a program where they have a "store" where homeless vets can get items free or very cheap. When you do your taxes there will be a line for donations.

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If you don't itemize when you file your taxes, don't bother with the list or receipt, you don't get any tax deduction for a donation anyway. If you DO itemize, make a list of the items and their used value - that's what comparable items sell for in a thrift store (Goodwill, Salvation Army). Give the items to a 501(c)3 charity - maybe Goodwill, Salvation Army, or St Vincent de Paul. They'll give you a receipt - attach your list to that - if you're audited the IRS auditor will want to see it. You'd deduct the amount as a charitable contribution on schedule A. Your tax savings would be the amount of the deduction times your tax bracket %. So say you donated items with purchase price of $600 total - the used value is probably something like $60. If you're in a 15% bracket, your tax savings from the donation is $9.

Judy

Google goodwill drop off followed by your city name. When you go there - they will have a notepad. They will ask you what is in each bag - generally. They may ask you what you think the value is. Never say more than $20 - they will look at you funny. No paper list required - they will ask - they don't want your list - they can barely read. They will give you a receipt. Keep it - for your taxes - you can claim up to $250 a year without a receipt. /

Go with the flow

Donations to charity are used as a deduction on your Schedule A itemized deductions. If you do not itemize there is not tax benefit. If you do intend to itemize using things like used clothing and household items you would need to make a list of the items donated and determine their fair market value. That is commonly what similar items are selling for in a thrift store such as Goodwill. Frequently the store will provide a list either at the individual store or on their web site of what they price common items for. When you drop off your items the charity gives you a receipt that will give a vague description like "5 bags of cloths" and two lamps. They are not permitted to establish or estimate the value. At present it is your responsibility to establish the value for each item claimed and there is no amount that can be claimed without documentation.

Mathew

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