Right around this time of year, I start adding up all of our charitable deductions. Donations to Goodwill and other non-profit thrift stores are a big part of that. One year, when we did a major clean out, we totaled almost $5,000 in charitable donations of clothing and household goods!
If you haven’t been taking write-offs for your charitable donations, make sure that you get started this year. You really can save quite a bit on your taxes, as long as you remember a few tips.
What Are Your Charitable Donations Worth?
When you donate goods to a charity, you get to subtract the value of the donated items from your total taxable income. How much you can save will depend on your tax bracket of course. You will save on your federal taxes, and in some states on your state taxes, too!
Document Your Charitable Donations
In order to claim your deductions, you will need to carefully document your donations. I keep a small notebook, so I can jot down our items. I date the donation and then list items with their approximate values. People make two common mistakes when they estimate the value of their donations. They either think their items are worth more than they are (a red flag to the IRS) or they think that they are worth too little (and miss out on their full deduction).
To correctly estimate the value of your charitable donations, visit the thrift store and check out the prices on comparable items. Visit at least once a year, since prices and values may change. Both the Salvation Army and the Goodwill have information on their websites to help you calculate your values.
If you are donating a lot of items or items of high value, you’ll want to go one step further, such as taking photos or having the items appraised.