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How to Reduce Your Taxes by Cleaning Out Your Closet
Looking for a way to reduce your tax bill this year? Why not clean out your closet and enjoy tax benefits at the same time!
Is your closet a cluttered mess? Would your life be much less stressful if there weren't so many things that you never wear stuffed in your closet? Why not clean it out before the end of the year and donate the items you no longer need to your favorite nonprofit organization? Not only will you be able to move forward with a more organized living space, you just might be able to reduce your tax bill as a result of your generosity.
To enjoy tax advantages as a result of cleaning out your closet, you'll need to donate the items that you no longer want or need to a charitable organization that accepts donations of used clothing and other types of household items. Goodwill and the Salvation Army are two of the nonprofit organizations groups that accept these types of donations.
There may be other groups that will also be happy to accept your donations in your local area. If you are concerned with being able to take a tax deduction for your donation, verify that the group that you select is a legitimate nonprofit organization and that you will be provided with a tax deduction receipt in exchange for your gift.
In some cases, the items you share may be given directly to needy individuals and families. In other cases, they'll be sold in thrift stores operated by the charity that accepts the donation, with the funds raised from their sale going toward providing services to underprivileged individuals in the community or to fund various programs provided by the organization that operates the store.
Before you take the items that you want to donate to the organization you will share them with, it's important for you to make an itemized list of every item that you are giving to the charity. You will need a complete list of the items that you are donating as backup documentation for your donation. The list will need to specify what you give to the charity as well as the value of each item. View a charitable donation valuation guide, such as the one published on the Salvation Army's website in order to get an idea of what the items you are sharing are worth.
When you turn over your donation to the charitable organization that is receiving the gift, request a tax deduction receipt form. Attach the form you are given to your list of items contributed and store it with all of your receipts until it is time to prepare your taxes. You'll be able to write off the value of the merchandise that you have given to charity during the tax year, allowing you to enjoy a reduced tax liability simply by cleaning out your closet.