Wednesday, May 19, 2010

How to Turn Your Clutter into a Tax Deduction

Note from Barb: Thank you to Keri at KHGAccounting for this informative guest blog post!


So, you’ve cleaned out your closets and now have several trash bags of items sitting in the garage. Your next step may be to find somewhere to donate the items. Donations of clothing and household items made to a qualified organization can be deducted on your federal tax return, if you itemize your deductions instead of claiming the standard deduction. The IRS maintains a list of qualified organizations that are eligible to receive tax-deductable donations at www.irs.gov/app/pub-78.

To be eligible for the charitable deduction the clothing or household items must be in good used condition or better. The donations should be valued by using fair market value; that is, the price that you would pay for a similar item at a garage sale, thrift or consignment shop. In order to claim the deduction you must also have a receipt showing the name of the charity, the date and location at which the contribution was made and a description of the property that was donated. Additional documentation is needed for single donations valued at more than $250. Special rules apply for donations of vehicles, jewelry, collections, artwork and property that has appreciated in value and can be found in IRS Publication 526. For more information on reducing your tax liability visit my blog at http://www.khgaccounting.com/news-and-notes .

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Thanks!