Taxes And Clutter

It is that time of year to start gathering your documents for your tax return. Yesterday in the car I heard a tax consultant talking about contributions and how to correctly report them. The advise was good and it plays right into organizing and decluttering stuff.

To be safe check out the IRS website and/or talk to your accountant, tax attorney or consultant.

If you give money to a church or to a non-profit and have the back up to prove it then it is easy to calculate. It becomes a little more complicated when giving goods. A car donation will need to be appraised and could potentially raise a red flag. The problem with giving stuff is it is always more valuable to you than the IRS.

How do you value that $55.00 dollar blouse you purchased a couple of years ago?

http://www.irs.gov/publications/p561/ar02.html

Go to the IRS website and look at Publication 561.

“Used clothing and other personal items are usually worth far less than the price you paid for them. Valuation of items of clothing does not lend itself to fixed formulas or methods.                          

The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value.                          

You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better. An item of clothing that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. See Deduction over $500 for certain clothing or household items, later.                          

For valuable furs or very expensive gowns, a Form 8283 may have to be sent with your tax return.”

One way to keep track of what you have given away, would be to take pictures. Make sure to write down the item, the date and the fair market value. Don’t forget your donation receipt. Keep good records probably goes without saying. If you are one of the few to keep receipts going back a few years then you could always attach that receipt for extra back up.

Every year as I prepare taxes I vow to do a better job at keeping records for the next year. Then next year comes and I am back to square one wishing I had kept better records. There is just no good excuse.  There are programs on the computer and scanning devices that just about do everything.

The same organizing techniques apply when it comes to taxes.

1. Like items with like items.

2. A place for everything and everything in it’s place.

Trust me. I know what you are going through. I could tell you that if you wait to the last minute to do your taxes that it will only take a minute to do but that would be a lie. What are you waiting for?

Get started today!

 

 

 

 

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