It’s that time of year. Tax time. And with it comes the joy of claiming charitable deductions, covering everything from that Picasso you gave to the homeless shelter to the piles of gently-used stuff you donated to Goodwill.
I did my duty and purchased my copy or TurboTax in late January with the best of intentions. I hate going through the motions of doing taxes, even though we keep pretty good records throughout the year. It’s almost as if I don’t need the darn software.
Except for one thing. In the past I had no idea how much to claim for donations. A check for $100 to Our Lady of Perpetual Procrastination is pretty easy to figure out. Deductible! Cha-Ching! Buying Girl Scout cookies? A bit of a head-scratcher, I still haven’t gotten ‘round to Googling that one (see perpetual procrastination).
Years ago, TurboTax allowed you the honor of purchasing an add-on, about as expensive as the base software called “It’s Deductible”. Turned out to be worth it, though it’s bundled with the product now.
Mrs. Golightly keeps record of what we’ve donated throughout the year with receipts neatly tucked in a manila folder until my avoidance hibernation is over. When I get to the part where I enter the charitable deductions, I actually look forward to it. Why? Because I don’t have to make up numbers!
The good people at TurboTax/Intuit have teamed up with the fantastic folks at the IRS to determine exactly how much a gently-used Cabbage-Patch doll is worth. Business Wire said “ taxpayers have the legal right to deduct the "fair market value" of their donated items. (IRS Publications 526 and 561) However, determining the accurate fair market value is no easy task. As a result, most taxpayers often guess conservatively, perhaps valuing a bag full of donated items at only $50 when the actual value could be $300 or more. Ultimately, the result is overpaid taxes.” My tax program helps me properly value from thousands of items – often more than I thought they were “worth”.
We probably donate 6 separate times throughout the year. In years past, we accrued too much stuff, and over time we realize what gets used and what doesn’t, what’s redundant, and what’s outgrown. One friend of mine put on her Facebook status that she’d donated over 350 items to ARC in the past year. Good for her. And I hope she gets rewarded handsomely. There is no shame in benefiting from generosity, and besides, it’s not a political contribution. Thrift stores are equal-opportunity.
Obviously, donating items is not about financial gain, but it’s sure a nice bonus you’re entitled to. By itself a nice tax deduction not the reason to give, and it’s not what The Thrifty Chicks is about. But it sure doesn’t hurt. One year our charitable contributions were almost $2000. That’s not what I said it was worth. It’s what Uncle Sam said it was worth, and it was all done in good conscience.
We shouldn’t need financial incentive to give what we no longer need, or to recycle what is salvageable. It’s the right thing to do. Getting a tax deduction for doing so is more icing than cake.
A word to the wise. The IRS treats donations toward the end of year as less deductible, so donate early and often.
In response to Mr. Golightly's excellent points on donating and tax
Keep in mind that donating to charitable thrift helps build the inventory. This is especially significant in communities where the reuse market is weak. If citizens of these communities all donated gently used items they really don't use or need, -we all know those items are out there- it will build up a stronger reuse market with more people participating.
So if you live in an area that needs a push, start the donation process from your own home and encourage friends and neighbors to do the same. Hopefully this will build the inventory that attracts enough interest in reuse to start a sustainable cycle of products for the charitable thrift to become more attractive.