If you itemize your tax return you are in a perfect position to pick up some extra dough.
You do know that you are allowed to deduct the fair market value of items you donate to qualified charitable organizations, right? And you probably don’t do a very good job of that because how on earth are you supposed to know the fair market value of those shoes or that bag of clothes? Not to mention that computer, lamp or other household appliance.
Most people stuff a bunch of clothes into bags, drop them off at a collection center and claim a $100 deduction. But those clothes could easily have been worth $1,500 or more if you only knew how to value them. And the values add up quickly.
Books, even magazines, can be donated to libraries or churches and properly valued. The law does not allow the charity to set the value of an item. You, the donor and taxpayer, must do that. But how much should you claim?
If you overstate the value you risk an audit, penalties and interest. If you underestimate, you will pay more taxes than you should.
Here are some examples of what donated items are worth, assuming “Good” condition:
Women’s dress: $12
Men’s suit: $23
Boys’ jeans: $4
Luggage set: $20
See what I mean? It can really add up fast.
In his booklet, Money for Your Used Clothing: Tax Year 2012, Certified Public Accountant William R. Lewis comes to the rescue of uncertain taxpayers. The booklet lists values for more than 700 items of clothing and household goods commonly donated to charity. The values are obtained from annual surveys of consignment and thrift stores that Lewis and his staff perform in all areas of the U.S., conforming to IRS requirements for donated items.
Lewis produces a new and updated version of this booklet every single year to reflect true values for the current tax year. And Lewis guarantees his work. If the IRS disallows the deduction, he will personally pay any interest and penalties. By using Money for Your Used Clothing, Lewis estimates clients (thousands of them are in our own Everyday Cheapskate family) have saved more than $15 million in taxes that would have otherwise lined the pockets of Uncle Sam. That’s a pile of allowable deductions.
Money for Your Used Clothing addresses recent tax law changes and guidelines for tax year 2012. It retails for $25, but because I believe this is such a valuable tool, I’ve negotiated a special price of just $20 for my Everyday Cheapskate readers. (Plus $2.53 for USPS media mail shipping which may take up to two weeks for delivery. Check our bookstore or call our office for priority mail shipping rates.)
To order, visit our bookstore ; call 800-550-3502; or mail your $22.53 check to Everyday Cheapskate, Dept. Money Book, PO Box 2099, Cypress, Ca 90630. To receive your booklet faster, call our office at 800-550-3502 and ask for priority shipping rates.
Question: It’s seven weeks until tax day. Are you ready? Join the conversation here.