Well it’s that time of year again. That time when the IRS wants us to send them all that tax stuff. It can be a stressful time of years for many people. Every time we send in our taxes we say, next year I will do my best to get all the tax deductions I can. We then let that falter through the year a bit. Then tax time comes again and we again start the worrying about having enough tax deductions.
There are so many tax deductions that people can take advantage of if they qualify to you. Sometimes it’s confusing as to whether you qualify or not. One way for sure I know you can get a tax deduction is through a clothing donation. That’s right. You can take your clothes that your family has grown out of or doesn’t like anymore and donate it and receive a tax deduction for it. What a great thing not only are you donating to charity you are helping yourself on your taxes.
My wife has gone through the hassle of having a garage sale the past couple of years and at the end of they day we walk away with a few hundred dollars. My opinion is that it's not the worth the trouble and I think she's finally agreeing with me. Instead, we've opted to donate what we have to Goodwill. It's much easier and we get more dollars in the form of a tax deduction than selling it. Did I already mention how easy it is?
So there are basically 5 steps to follow to have clothing donations qualify as a tax deduction. These are important to follow as this claim is one that many people over claim on or just right lie.
Steps for Clothing Donations
Step 1– Gather all you items and organize them. Most items will qualify for a clothing donation. Examples are jackets, coats, pants, tops, hats etc. Please keep in mind these items must be clean and in good shape. Good way to think of this is would you wear it. You can then take these to your local thrift shop.
Step 2– Chances are you will not be questioned about your clothing donation. But in case of question or an audit it is a wise idea to make an itemized list. Have good detail with this list so it’s easy to refer to if you ever need to. Some people suggest taking pictures of every item, including my CPA. It's always good to have visual proof of your donation.
More from GFC, Below
Step 3– Then comes the job of assigning a fair market value to each item. Remember the keyword here is fair.There is no set amount for items they expect you to use subjective approximations. Like $40.00 for jeans at thrift store is unrealistic. There is a $500.00 limit for clothing donations generally, after that you need to complete Section A on form 8283. You will find clothing charts and valuation tables on the internet to assist you if needed. For example, Goodwill has a valuation guide to help you value your items. In their guide, a pair of women's jeans range from $4-$21.
Step 4– Now you can take your clothing donation to the thrift store. You don’t need to make an appointment. You take them your donation and then ask for a receipt. You don’t need a receipt if it’s under $250.00 yet it’s always good to ask for one. Some will just mark 3 bags of clothing as they probably will not have the time to sort it when you deliver it.
Step 5 – Now is the time that you make that claim on your taxes. Since you went through all the trouble of sorting and itemizing you should do this as well. Schedule A of Form 1040 is the proper place to report the value of your clothing donation. The total value of your charitable deductions cannot be more than 50% of your adjusted gross income in any single year. However if you do have donations that exceed the 50% you can carry this forward to other years.
Easy Ways for Tax Deductions
I am sure most of us are giving and charitable all years in many ways. Some people also claim they don’t want to benefit from making a donation to charity. We need to be realistic about this. While charitable giving is always a worthy cause, it doesn’t mean you shouldn’t try to fully maximize the tax advantages that the government provides for you.