Monday, December 27, 2010

Year-End Goods Donations

(I promise I don't always look this haggard or speak this fast, but I didn't want to go to bed without sharing a tax tip with you. See how much I love you?!)

If you are planning on itemizing deductions on your taxes this year, you've got a few days to get your donations in and help lower your tax bill!

1. Gather together clothes, toys, things being replaced by new Christmas gifts, kitchen gadgets, and knick-knacks to donate to a charity thrift store (such as Goodwill or Deseret Industries).

2. Gather books you are no longer interested in and donate them to the library, instead of the thrift store. You can write off a higher amount for the books if you give them to the library rather than giving them to a thrift store that re-sells them for $2.

3. Go through your pantry and pull out any foods you neglected to use through the year (dry beans, boxed foods, canned and jarred foods) and donate them to a local food bank.

4. Gather unused toiletries, hotel soaps and shampoos, laundry soap and blankets to donate to a homeless shelter or anywhere that allows people to come shower, clean up and launder their clothes, such as homeless outreach centers and women's shelters.

5. Donate your fabric scraps to a humanitarian center or anywhere that makes quilts and baby blankets.

As you put things in a box to donate to a specific place, write down what you are donating so you can estimate the value of each and take an accurate write-off. You don't want to underestimate and deny yourself a reasonable deduction; you don't want to overestimate and compromise your integrity (or possibly cause problems with the IRS).

Remember, you can only write off the "fair market value" of the item, not the retail price. For example:

You donate a pair of jeans to the Goodwill thrift store. Even though you paid $32 for the jeans when you bought them, Goodwill only resells jeans at $6. Therefore, the "fair market value" you claim for the jeans is $6.

Another option is to find out what similar items of similar quality and condition sell for on Notice I said "sell for" and not "are listed for."

Last, but certainly not least, when you drop off your donations, make sure to get receipts! Immediately, write down the total value of your donation on the receipt.

OK, there you go! This is an awesome opportunity to declutter your house and help lower your tax bill. Get ready, get set, go!

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