Whether you’re packing up your Summer clothes to make room for Fall or you’re on the move this Fall, there are ways to clean up the clutter and find a tax deduction.
Last year, we moved to a new home and there’s something about moving that really puts all that “stuff” in perspective. That box you have tucked away in the back of the closet, it can sit there… until you need to move.
We donated a lot of our stuff. Stuff that we rarely used. Stuff we didn’t want to move. If it could be put to good use by someone else, we took it to the local Goodwill. Not only did we reduce how much we had, we got a little tax deduction too.
When you donate to a worthy cause, you can feel good about what you’re doing.
However, a donation doesn’t just provide you with the intangible benefits of feeling good about your donation (or emptying your closet); you can also receive a tax benefit.
The good news is that you can donate more than just money or “stuff.” Charitable goods are always valuable but you can also claim the miles you drive when you volunteer your services to a charity.
First things first, before you claim charitable donations, ensure you are making them to a qualified charity or religious organization.
Types of Charitable Donations
There are three main types of charitable donations you can claim:
- Money: When you make a monetary donation, you can claim that. Be sure to get a receipt for the amount that you donate, though, since you will need that documentation for your records. You can make donations via cash, check, PayPal, credit card, or in other ways that are accepted as money.
- Goods: If you want to donate goods, you need to make sure that they are in usable condition. Once again, you will need a receipt to verify that you donated the goods — and that the charity accepted them. You can only deduct the current fair market value, you can’t deduct the amount you paid originally, although the IRS does want to know that information, if you have it.
- Mileage: If you drive your car in service of a charity, you can deduct the mileage. You get 14 cents per mile for tax year 2013, and for tax year 2014. This can provide you with the chance to recoup some of the wear and tear on your car, if you drive it for charitable purposes.
It’s important to understand that you aren’t allowed to deduct the value of services rendered to a charity, nor can you deduct the time you donate.
Also, you can’t claim a deduction for the time you spend. So, if you spent 40 hours last year in the soup kitchen, you can’t claim a deduction for that time, based on your hourly wage.
How to Value Donations
When trying to figure out the current market value for your donated goods don’t worry. TurboTax ItsDeductible will value and track your donations for you year round. You can even track your mileage.
If you’re looking to begin this Fall with a clean slate, don’t hesitate to start with cleaning out your closets.