Would you clean out your closets for $400?
Are your storage areas overflowing? Do your children outgrow their clothes at the speed of light? Have you outgrown — or just grown tired of — some of your clothes and household items? Wouldn’t it be nice to receive some cash for those unwanted but perfectly usable items that overwhelm your storage space?
It’s a typical scene. You’ve cleaned out a closet or your garage and have a box full of items you no longer want. Maybe they’re left over from a garage sale. You’d rather give it to charity than send it to a landfill, or maybe you just don’t want to have a garage sale.
You know you can deduct the value of the items on your tax return. (By the way, your return for 2015 is due Apr 18, 2016 with thanks to Wash., D.C. for the gift of a 3-day extension. Washington will celebrate Emancipation Day on April 15 and the IRS will be closed. The next business day is Monday, April 18, 2016.) But the question is: How are you we supposed to know the values of items in good condition that we donate to qualified charities?
The problem: If we overstate the values, we risk an IRS audit, penalties and interest. If we underestimate, we could end up paying more taxes than required.
For many years, the hubs and I have relied on William Lewis, CPA, who compiles one of the most valuable resources I know for ordinary folks like us. “Money for Your Used Clothing” is an amazing resource that lists more than 1,300 values for commonly donated household and clothing items based on current prices of these items on the secondary market.
How does he come up with this list? I can promise you he does not rely on haphazard lists anyone can find online that supposedly offer said market values. I don’t either because I know they have not been vetted against what used items are actually selling for in thrift stores right now, today in the year 2015. And I don’t trust that those values have been vetted against what the IRS will allow, either. That’s what sets this resource apart.
Bill Lewis and his team (I know these people and they take this matter very seriously) travel from store to store, city to city, state to state to audit the actual price tags in thrift stores for everything from used shirts, pants, dresses, sweaters, blouses, socks, shoes, plates, sheets, towels, computers, vases, beds, dressers, lamps, chairs, sofa — just about everything you can imagine.
Then they use the average prices to create this exhaustive list and make it available to us including clear instructions on how to present these tax deductions so the IRS is satisfied. You won’t believe what a thorough and complete resource this is.
Money for Your Used Clothing is also a workbook — one that you fill in with your specific information (the instructions are very easy to follow) then keep with your tax records.
If you are ever audited due to the values you claim on your return for Tax Year 2015, you’re in good shape because with this resource comes with an Audit Protection Guarantee. Bill and his team will step in as your Power of Attorney to defend your deductions. And if the IRS prevails, they will pay any penalties and fees involved. How can they take on that risk? Because the information they provide is rock solid. It is reliable and I can tell you that from personal experience.
When Bill Lewis says you will increase your tax refund (or reduce your tax liability if you owe) by at least $250, he’s not kidding. In the past 20 years that I have been recommending this resource, our Everyday Cheapskate and Debt-Proof Living members have collectively save hundreds of thousands of dollars in over payment of taxes.
If you donate items that are in good or better condition to a non-profit organization with tax-exempt status that gives a receipt for donations, you really need to capture the highest and best valuation for those donations. It’s legal, ethical and smart, too.
One more thing: You must use the 2015 Tax Year version of Money for Your Used Clothing for your 2015 return. You dare not try to use an earlier year’s valuations because that will void your Audit Protection Guarantee. Values change radically from one year to the next.