How Your Tax Deduction on Donations

How  Your Tax Deduction on Donations

How to Track Your Tax Deduction on Donations With Its Deductible

No one enjoys paying taxes. Fortunately, there are a few ways that you can cut your overall tax liability, from 401k's to HSA's for medical expenses, to charitable donations. Taking your gently used clothes, furniture, electronics, or other valuables to charities like Goodwill or The Salvation Army is not only a great way to clear out your house and apartment, it goes to help a lot of people who both work for the charities and shop at the stores.

How  Your Tax Deduction on Donations
How  Your Tax Deduction on Donations

 When it comes time to file your taxes, it can be difficult to dig up all of the receipts, records, or even remember all of the items that you donated. Luckily, I stumbled upon ItsDeducible, which will automatically track your tax deduction on donations and also estimate the fair market value of your donations to give you an estimate of how much it will save on your taxes. The best part is that at the end of the year, you can export the list or import it directly into TurboTax to save tons of time.

Disclaimer: I am not a licensed tax professional and this is intended to be general advice. For specific advice, please consult a licensed CPA or tax official.

With that out of the way, let's get started.

Before you rush off to take your items to the closest donation center, you will want to do some organization. It will save you some time and ensure that you are getting the maximum benefit from your donations, and it may save you from accidentally donating something that can be repaired, sold, or converted into another useful household item.

Gather up items to donate

Sort the items into similar piles based on their type. Clothes should be broken out into different types of pants, shirts, shoes, or other categories. Other items can simply be grouped by whatever logical system makes the most sense. It's helpful if you have your computer or laptop handy for the next step.

Estimate your tax deduction on donations

Sign up for an account over at Its Deductible, and create a new donation to start adding items. For each item, do a quick search for the general category and then find the specific item that you want to donate, which will give you a value for both High quality and Medium quality. Obviously donating items that are in the "High" category will give you the biggest benefit, but if its a useful item that another person would find helpful, donate it. Low-quality items that don't meet the minimum standard can easily be repurposed into rags for using around the house or working on a bike, motorcycle, or car.

After entering the items into Its Deductible, print out one or two copies of the list to take with you when you donate.

Take the items to the donation center

When you get to Goodwill, Salvation Army, or your charity of choice, simply hand them the items and ask that they stamp your pre-printed list. This will be very easy for them, will have all the item values, and the person helping you should be very appreciative of your consolidated list, especially if you bring them an extra copy.
When you get home, file away the stamped list in a secure document folder to be able to reference in the event you ever get audited. As soon as tax time rolls around, it should be really simple to import your list into TurboTax and get your tax benefit.
What you will want to keep

High-end sports equipment (road bikes, golf clubs, etc)

Designer fashion items or accessories (Louis Vuitton or equivalent)

Larger appliances and furniture in good condition (many charities will come to take these away for you)

Cars or other vehicles (there are special charities for cars)

Any item where the estimated value exceeds $5000 (items over this value will need a qualified appraisal)

Some of the more expensive items are actually very easy to sell in resale shops or through Craigslist, which is generally going to be a better option than donating. You could split the profits between yourself and a non-profit of your choice if you want to satisfy your conscience.

Any other tips for dealing with charitable donations? Leave a comment.


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