If you’re like me, at least once a year you make an attempt at organizing the house, and end up with several bags of items to donate to charity (clothing, electronics, books, toys, etc.) Before driving to the donation center and waving good-bye to that sweater you bought five years ago and haven’t worn since (been there, done that), make sure to jot down a list of the donated items, and ask one of the charity volunteers for a donation receipt. These receipts are for your personal records, and can prove to your donation later to the IRS if they ask.

Now for the fun part! Typical donations such as clothing and household items can be claimed at their fair market value (FMV) which adds to your itemized deductions. These deductions are then subtracted from your Net Adjusted Income to calculate Taxable Income. As long as you itemize deductions (versus taking the standard deduction) you’ll benefit monetarily from each donation.

The IRS leaves it up to the taxpayer to determine the Fair Market Value of each item. If you use Turbo Tax to prepare your taxes, the program automatically gives FMV suggestions on hundreds of commonly donated items. You can either enter the items into the software come spring time, or utilize TT’s free online donation tracking service called It’s Deductible. It’s Deductible syncs with TT so you can record your donations throughout the year, and import the info when it’s tax time. Using this online program, you can choose from hundreds of items in order to narrow down an accurate FMV for your donated item. For example, I clicked on the men’s clothing category (searching for jeans) and the following information was listed:

ID worksheet

A pair of jeans donated in medium quality have a market value of $7, and a low quality pair would fetch $1.50. I’d be lucky to sell a pair of hubby’s gently used jeans at a yard sale for $1.50! Donate a few pairs of jeans, a few shirts, some miscellaneous electronics, and soon you’re looking at a happier, healthier check come April.

Some things to remember:

  • Get a receipt! A detailed receipt is preferred, but a general receipt is better than none. You have to be able to prove to the IRS that you did in fact make the donation (should they inquire).
  • Take pictures of the donation (again, for proof), or at the very least, make a note of what items you’ve donated. Staple the list or pictures to the receipt.
  • Donations of more than $200 at a time MAY be subject to more strict regulations than their lower-value counterparts. I say may because I remember reading about it somewhere, but then my sweet little 3 year old closed all my open browser windows and I wasn’t able to read further. If you’re planning on making a donation of a larger item, it’d be worth researching.
  • Even if you don’t use Turbo Tax, you can use It’s Deductible for free, and just transfer the donation info by hand.
  • Swapping “old stuff” with friends, or giving away items to people who will actually use them always beats dropping them off at a thrift shop and messing with all the paperwork 🙂