Tax Valuation for Donated Goods
You know shopping at thrift shops saves money, but did you know that donating to thrift shops saves money too?
You can deduct the value of items donated to charities such as Goodwill and Salvation Army from your taxes. The amount you receive back depends on your tax bracket.
For example, I am in a 15% tax bracket. If I donate $100 of goods to Goodwill, $15 will be deducted from my taxes owed.
How do you know the value of used items?
I keep a bag in the bottom of my closet where I toss items for donation. When the bag is full I just drop it off at a donation center. I am always offered a receipt but in the past it seemed too tedious to fill out all of the information.
I have made a checklist that I can fill out at home. Now, when I go to Goodwill I know the value of my items ahead of time and can just staple my checklist to the receipt.
A few things to remember when donating…
- Some items like furniture or televisions are not accepted. Check out your charity ahead of time.
- Get a signed receipt, and keep it with your tax records. You must have documentation of your donations in order to claim a deduction.
- Make sure your items are in good condition.
- Be honest when figuring the value of your items.
You can use your receipts for the tax year only. For example, charitable goods donated today cannot be claimed on your 2010 taxes. But, it is never to late to get started for next year!
Just a reminder that I am not a tax professional and my advice is yours to use at your own risk.