Deducting donated clothes? Document, document, document!

It’s a discussion every tax pro has dozens of times during tax season: “What was the value of your non-cash donations?”

“Gee, Joe, I don’t know–what do you think the value would be?”

As Ron Lieber of The New York Times  discovered when hauling his old clothes to Goodwill, the friendly Goodwill folks won’t help you with this. When Lieber spoke with enrolled agents, who he describes as “hardened members of the corps…who often represent taxpayers in front of Internal Revenue Service auditors” (Thanks, Ron!!), he also learned — as many of my clients have already heard — that documenting what you gave away, and the amount that the thrift shop is able to resell things for, is the key to getting a deduction.

Here are my three keys for getting a deduction that will stand up in audit:1) Get that receipt the charity gives you, dated and signed by the charity employee.  2) Immediately fill it out, listing your donations. Use a separate piece of paper or spreadsheet if necessary. (Get a sales list from Goodwill, Salvation Army, or comparable charity so you can accurately estimate the resale value of your stuff.)  3) Pictures can be worth a thousand words. I’ve had clients lay their contributions out on the floor in their home and take photos that they save in case the IRS ever wants proof of what was donated. Great strategy.

How your tax $$$ subsidize Walmart & McDonald’s

One more reason fast-food and other low-wage businesses are happy with the status quo on minimum wage: Your tax dollars help subsidize their chintzy wages, which often leave their workers on public assistance. As detailed in a University of California study and reported in The New York Times, around half of all home health care…Continue Reading