How to optimize tax deductions when you donate stuff

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How to optimize tax deductions when you donate stuff
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Spring and summer are the seasons for renewal, which for many of us means getting our homes in tip top shape. And the easiest, and frankly the cheapest, way to get your house looking its best is to declutter and clean. After all, it is the first thing that real estate agents suggest when people are readying their homes for sale.

You can absolutely choose to sell your unwanted belongings, and for certain high value items, you’re smart to make a few bucks. There are certainly lots of great sales apps, plus tried and true methods like eBay, Craigslist and garage sales.

But for the majority of your stuff, it’s usually easier to donate to a non-profit such as Goodwill or Salvation Army and just take the tax deduction.

Read more: 14 red flags that will get you audited by the IRS

Harvesting donations for a tax deduction

However, how you manage your donations will determine if you’ll be sitting pretty come tax time. That means you need to itemize every single donated item. Yes, it’s more work, but it’ll pay off big time.

The difference between vaguely writing ‘books’ vs. ‘forty-seven hardbacks and seventeen paperbacks’ on your donation slip will make a sizable difference when it comes time to do your taxes.

The Salvation Army Value Guide is considered the gold standard for donation values, and makes it easy to assign a specific dollar amount to your deductions.

The IRS’ own guide reads that, ‘The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value.’

(And if you’re using TurboTax or a similar online tax preparation service, there’s already a built-in donation value guide!) Look, so easy!

Book value guide

I give a lot to my local Goodwill, and for years I just wrote vague descriptions such as ‘toys”on my donation slips, and later had no clue of how to value those donations.

It turns out I’d been doing myself a financial disservice. Just check out how much you can deduct for simple mens’ clothing: men's clothing value guide

Conclusion:

When embarking on a spring or summer cleaning/declutter-fest, you’ll do yourself a financial favor by itemizing all your donations. Yes, it’s more work at the start, but you’ll be sure to get your maximum tax refund! Make the choice to be money smart.

Read more: Beware of this used car donation gotcha

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Katy Wolk-Stanley About the author:
Katy Wolk-Stanley, a.k.a. The Non-Consumer Advocate is a Portland, Oregon based RN and writer who describes herself as a utility bill scholar, library patron, laundry-hanger-upper and teenage boy wrangler. She’s been featured on The Today Show, The NY Times and The National Enquirer.
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