 Change this "Bad" tax habit before you drop off the items at Goodwill. by Joe Harding, CPA Every year all around America almost every tax preparer asks the question, “Do you have charitable deductions such as donations to Goodwill?” The answer is often, “Yes: $500 at Goodwill, Salvation Army and others.” That answer, although widely accepted, is not defensible during an IRS audit. This is how you should think and act now around your charitable gifting. Cash is easy to use, but never use cash! Write a check or use your credit card. Also, used clothing is the biggest offender so below is a link to IRS publication 561; https://www.irs.gov/uac/About-Publication-561 The long and the short of it is that the values of the items you bag and drop off are the prices they will put on the items when sold next week. It is NOT a percentage of what you paid! They usually have a guide at any location as to their pricing on items. You can pick that up and put it with your tax records along with the receipt that says, “One Bag of Clothes.” Before you take your items, spread them out on a table, floor and bed and TAKE A PHOTO with your phone! It won’t take that long to spread those clothes you just took out of the closet on the bed and snap a photo seconds before you shove them all in the bag to go. After you’ve dropped them off at Goodwill and picked up the sheet, print the photo. Then at tax time it takes a few seconds to figure out the value of your donation. There are 1,2,3,4,5,6 sweaters, 1,2,3,4,5 slacks and 1,2 belts. Sweaters are $24, slacks are $12 and belts are $7 on this sheet from Goodwill; that’s $218 included on your Schedule A. It takes moments to do, but that photo and the list in with your tax documents is 100% defendable during an audit! If you have other tax questions, call our office for a 30 min review. Call 480-385-7399 or email joe@eatoncambridge.com today! As Always, Joe Harding, CPA Comments are closed.
|