All right... how do I write off clothing donations?

xantippeJuly 20, 2007

We are decluttering our closets AND our basement (woo hoo!), and in the process have been accumulating an enormous pile of clothing and household items to donate. For the first time, we want to consider trying to get a tax deduction for them. The problem is that I just can't figure out how to document the donations, even though I've spent hours reading about the topic on the internet. It sounds like the IRS rules have changed, and I just can't make heads or tails of it.

So... I was hoping you decluttering experts could help me out and tell me how you all approach this process. How do you write the list of items and what kind of receipt do you ask for?

I appreciate your advice so much! Once I have it, the piles can finally go to the thrift store. :)

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shawneeks

The two main software players are ItsDeductible and DeductionPro. I think one is made by the TaxCut people and one by the Quicken people. But you don't need to match to the same one unless you want it to pull in data automatically. Anyway, it's about $20 (and you have to buy it each year). It gives you categories like 'Excellent', 'Average', and 'Poor'. And it will give you the fair values for them. It even prints off the tax form. It also can print a sheet for the charity to sign. However we give it all to Salvation Army and they just give a receipt that says how many bags of stuff we gave them. The peace of mind knowing we are using 'standard' values makes the $20 well worth the software. I haven't been audited yet, but I've been doing this for 4 years with no issues. We've saved well over $1,000 in that time.

    Bookmark   July 20, 2007 at 7:39PM
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steve_o

Here's a guide to values the Salvation Army suggests for donated clothing and household goods:

Here is a link that might be useful: Salvation Army donation value guidelines

    Bookmark   July 20, 2007 at 8:30PM
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quiltglo

The IRS will no longer allow you to take a deduction for clothing and household items not in good used condition or better. The new law took effect August 17, 2006. You can still donate them, you just cannot take a write-off.

Here's how I do it. I write down every single item. (Woman's long sleeve T-shirt, large, good condition, Land's End.) Sometimes I put the price I know our local thrift stores will sell them for if it's an odd item. (Heart shaped, wire red basket 2.99) Spread a bag's worth on the bed and snap a pic. (This really is an important step.) Clip list and pics together and put them with the receipt when I donate. Always get a receipt. Ask how the receipt is handled where you donate. We cannot do like shawnneks and take them something. They have their own receipts and they fill in how many bags, boxes, furniture, etc.

Then you wait. We feel that Turbotax ItsDeductible is the best program for us and it's very easy to use. You have to wait, though, because the edition for each tax year doesn't come out until mid-spring the following year. So, for the tax year of 2007, the software will be available in 2008.

We go with this program for several reasons. If you register the software like directed, if your are audited by the IRS and they disallow the deduction, Intel will pay the taxes and any penalty. The company researches the prices and stands behind their allowable amounts. And the Salvation Army list is extremely low for allowable amounts. You can also use the prices of your local thrift stores (charity type) if you know the prices and can document that amount. Price vary across the country, but I have found the ItsDeductible price is better than our stores.

Sounds like a pain, but it's not. We just do our typical donations and we take between $3,000 and $5,000 a year in non-cash donations. It probably takes me less than 10 hours a year to list everything and then input it into the program. Really good rate of pay in my opinion.

Of course, you have to be itemizing your taxes to take the non-cash donations. The program also helps you keep track of all of that volunteer milages and cash donations.

Gloria (PS shawneeks. I was raised in Blue Springs, spent a chunk of my 20's in Westport and North KCMO. Rest of the time in Topeka.)

    Bookmark   July 20, 2007 at 11:18PM
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wantoretire_did

Check with your accountant. We take the standard deduction so don't come even close with donations to itemize, even with a mortgage, etc. I just take clothing and small household articles to a center in town that distributes to the needy. Books we donate to the library. It's a win-win; I get rid of stuff and those who need it can make use of it.

Even buying yarn and making afghans for charity doesn't bring the amount up to itemizing.

I didn't realize it until this year we talked to him about donating some furniture and writing it off. He said that for what the going rate is for good used furniture still would be below the threshhold.

I just "assumed" HA HA, silly me, that we were itemizing because of the mortgage and taxes. I'm the one who does all the bill paying and recordkeeping. I should know better. So now, I don't even have to bother getting and saving receipts (less to organize).

    Bookmark   July 21, 2007 at 6:25AM
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jannie

There's a charity near me that will send a truck and gives you a blank receipt when you make donations. I hate to say it, but I just guess at the value. I'd put $100 or $200 for a large amount of clothes, unlerss there was something really spectacular, like a fur coat.

    Bookmark   July 21, 2007 at 12:36PM
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wantoretire_did

Gloria - Apologies. I actually looked to see if you had posted, before I did, and completely skipped it. And I give DH a rough time about "male myopia"!!!!!!

    Bookmark   July 21, 2007 at 1:42PM
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western_pa_luann

I hate to say it, but I just guess at the value. I'd put $100 or $200 for a large amount of clothes,

Then how do you show proof if you get audited by the IRS?

    Bookmark   July 21, 2007 at 4:16PM
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xantippe

Wow, you guys have given me a lot to think about! I really appreciate all the suggestions... now I just have to research the software recommended. The ItsDeductible looks fantastic, but since we are now going to H&R Block, we don't use TurboTax anymore. I'm trying to figure out if ItsDeductible would work as a stand alone product. Also, steve_o, the Salvation Army list looks useful, so thanks for the suggestion. It looks like you can even schedule a pickup using their website! Woo hoo.

    Bookmark   July 22, 2007 at 8:49PM
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zzsladies

here is how we do it...
we go to the salvation army and get a sheet listing the price of the items.
then we open excel and make a spreadsheet.
we list:
item color destription condition price

then i have the kids enter each item in the computer. once its all entered, we total it out and take it with us to the salvation army. they sign it and give us a reciept.
it really is a win win situation.
stace

    Bookmark   July 23, 2007 at 2:27AM
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western_pa_luann

I found a YWCA Thrift Shop that takes care of all the documentation for me!

THEY keep track of what I donate.
THEY note what the items actually sold for.
THEY send me an IRS-approved form every December that states exactly what my deduction is.

The only thing I have to do is get the items to the Thrift Shop!

    Bookmark   July 23, 2007 at 9:11AM
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talley_sue_nyc

I do what Jannie does, except that I round WAY down.

I won't donate clothes that I don't consider to be in good condition--nearly new.

And I figure $2 per item.

    Bookmark   July 23, 2007 at 9:47AM
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Jane_the_Renovator

We used to have a Goodwill dropoff EVERY WEEK. Yeeps! Thank goodness the house is much more decluttered and those days are gone. Here's what we did:

1) We had a designated "Goodwill tub." Everything for Goodwill went into the tub in a closet and was neatly contained.

2) When the Goodwill tub was full, we pulled everything out and made an itemized list while putting it into bags... i.e. women's slacks 3, plush toys 2,

3) Then, we'd go, drop it all off, and either write on the Goodwill receipt what we'd donated or staple our list to the receipt.

Once a year, we added it all up using the Salvation Army's valuation guide. For items not on their guide, we just entered in what we'd pay for the item at a garage sale, which is on the low side.

Don't wait to find the "perfect" way to donate. JUST DO IT!!

Listing the stuff out takes 5-10 minutes. We use ItsDeductible, but we usually enter everything at tax time. It doesn't take long, and we usually can't believe a) that we donated that much stuff, b) that "little" donations over the year could add up to that much STUFF and c) that it was worth so much as a tax deduction.

    Bookmark   July 23, 2007 at 12:15PM
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quiltglo

xantippe, you don't need to be using Turbotax to use Itsdeductible. We've never used Turbotax. Just take the final amounts to H&R, they don't want how you got the totals anyway.

Talleysue, I guess I need all of the deductions I can get, but a girl's turtleneck in good condition was worth $8.00 last year. A sweatshirt was $12.00 and a dress was worth $11.00. It really adds up for more than $2.00 an item.

Gloria

    Bookmark   July 23, 2007 at 9:46PM
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xantippe

Quiltglo, I was so exited to read that. I even signed up for an Its Deductible account... and then I paged through to the FAQ and got this:

---

What's new with ItsDeductible?

For 2007 tax returns, we'll integrate ItsDeductible into TurboTax. You won't have to download the ItsDeductible product or worry about the desktop vs. online import issues. Our goal is to create a simple, no-fuss way to enter and track charitable donations.

Because of this integration into TurboTax, ItsDeductible is no longer available for purchase as a stand-alone product. Instead, we're now offering ItsDeductible Tracker.

This online Tracker is free to use and helps you organize your donations year-round. It's a great way to make sure no item is overlooked during tax time.

Where are my item values?

ItsDeductible Tracker does not show item values. However, you can see what all of your donations are worth once you've imported the information into your 2007 TurboTax return.*

What if I need my item values now?

Unfortunately, the only way to see item values is to import your ItsDeductible Tracker information into your 2007 TurboTax return. After importing, you can make any necessary changes within TurboTax.

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GRRRRRR! I guess I will be doing this the old fashioned way.

    Bookmark   July 24, 2007 at 1:59PM
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quiltglo

Hmmm. We just previously picked the software up at Costco. I went to the website and signed up and found the message you are talking about.

Bummer.

Gloria

    Bookmark   July 25, 2007 at 3:41AM
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quiltglo

Sent the big guy to the site to check out on the costs for Itsdeductible. He said we would probably buy Turbotax just to get Itsdeductible. With the amount of deduction we claim, the $50 will be worth still having the software. He'll then just input the total into our tax return on his software.

Gloria

    Bookmark   July 27, 2007 at 7:32PM
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