It is that time again. Time for taxes. For some, this is a dreaded time of numbers, calculations and reading and trying to understand tax law. Dare I say that I actually enjoy doing my taxes. There I said it. I know that probably makes me an anomaly. I use Turbo Tax. I love entering in my information and seeing my refund add up and up. I also know that works both ways. What goes up can also go down. I definitely don’t like it when the refund goes down.
What I want to talk about today is It’s Deductible. It is a part of the Turbo Tax software which allows you to deduct items which you have donated to a charity such as clothing, housewares, toys, etc. The charity has to be a qualifying organization, but most thrift stores, homeless shelters, etc. fall under this category. The items which are donated have to be in excellent or good condition, and no item can be valued at over $500. If you have a high valued item, you have to get an appraisal on the item in order to be able to deduct it.
Why talk about It’s Deductible? It is amazing to me over the course of the year the people that I talk to that don’t know about or take advantage of It’s Deductible. The IRS allows you to donate items to charity every year and take a tax deduction for those items that you did not want anymore anyway. How cool is that?
I used to do yard sales. I would spend weeks or even a month collecting items to sell. I would stay up late for one or two nights pricing each item, purchasing signs (expense), making table signs (expense), and driving to a friend’s house to pick up borrowed tables to use (expense). I would wake up early in the morning to set the items out, and of course, send my husband to go get Starbucks and donuts (expense) to get our day started out right, right? I would sit out for at least 5-7 hours in the sun negotiating with customers for a win-win deal for both parties. Then I would send my hubby out again for lunch at Sonic (expense), because who has time to cook or do lunch when you were trying to man a yard sale. Does any of this sound familiar?
The last time I had a yard sale, I said to myself that was the last one I was going to ever do. I know people say things in the heat of the moment that they don’t mean, but I kind of meant it. I am not saying I will not ever have another one, but to me the cost outweighs the gain. The most on average that I have ever made from a yard sale is between $60-$110. By the time I pay for my expenses such as Starbucks and the yard sale items I purchased from my friend that she was getting rid of (Oh no, you have done that too!), I don’t end up with that much of a profit.
Now, I just donate. Every year I make 3-5 donations to charity. On It’s Deductible, the average I get back on all my donations is usually $100 or more. No prep work. No staying up late or getting up early. No wasted money on eating out. Just a refund back to me. All I have to do is list my items, drop them off while I am in that area anyway, and enter them on It’s Deductible. Now that is something I can do. It saves me a lot of time and makes me money.
Here’s how it works. I put items I don’t want anymore into my donate bin. When the donate bin is full, I will document the items on a piece of paper. I just use regular paper, but I have a friend who uses a spreadsheet. Feel free to use whichever method. Items have to be of medium or high value. I translate that to mean in good or excellent condition. I make four columns on my paper. The quantity, a description of the item, the condition (G for Good or E for excellent, or you could do M for medium and H for High), and a reasonable price I think the item is worth. I take the items to the charity of my choice, and I get a receipt. Don’t forget the receipt! I staple the receipt to my paper listing my items and file away until tax time.
If you itemize your deductions on your taxes, you can use It’s Deductible to list your items. It’s Deductible will tell you the amount you can claim by law for each item. For example, you have a men’s long-sleeved dress shirt in excellent condition. You go to clothing, then men’s clothing. A men’s dress shirt in excellent or high condition is worth $9. You click the box and add that item to your list. If you cannot find an item, you can do a search for the item in the search box. Rarely, an item is not listed on It’s Deductible, but if this happens to you, there is an option to create your own item and price. This is why I like to come up with a price for each item on my own list just in case I need to have a price. You continue adding items until your donation is completely documented, and you add the donation to your deductions.
I am not a tax expert and don’t pretend to be. Always read the current tax laws which apply to your tax situation at www.irs.gov. I just know that I earn money towards my refund every year on my donated items to charity on stuff I didn’t want anyway that was cluttering up my house. I know and fully intend to render unto Caesar what is Caesar’s, but I am going to take full advantage of all of the deductions I can legally take. I don’t want to give Caesar any more than I legally have to.