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A Last-Minute, Year-End Tax Break Comments

  • By DailyWorth Team
  • December 06, 2011

Flickr - Heart on Clothes Hanger While you’re up in the attic or closet-diving for holiday decorations, lock in one last tax deduction by gathering up your old stuff.

It could offset a nice chunk of your holiday bill: If you’re in the 25% tax bracket and you donate $1,000 worth of clothing and household goods to charity, you could possibly deduct $250 from your taxes.

Just make sure you itemize your deductions, and follow these guidelines:

    • Spit & polish. Donations must be in good condition or better. Yes, that’s subjective—but it doesn’t hurt to snap photos of each item, says Barbara Weltman, attorney and author of J.K. Lasser’s 1001 Deductions and Tax Breaks 2012.
    • Get approval. You have to donate to a charity approved by the IRS to get the deduction.

 

  • Do the math. Figure out the approximate value of every item—it should be about what you’d pay for it in a thrift store, Weltman says. Then, add it up:
    • If the total for your donated goods is less than $250, the IRS only requires that you make a list of the items donated.
    • If it’s $250–$500, ask the charity for written acknowledgement of your donation or a receipt (many organizations may let you fill this out yourself).
    • More than $500? Get a receipt and fill out Form 8283 when you file your taxes.

Pay it forward. What can you do before year’s end to knock down your tax bill? Photo Source: sarah.yusko {mostly caught up}'s photostream on Flickr

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