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Tuesday, December 22

Aggressive Tax Avoidance: Donate Unwanted Items Before Year End

A major motivator in my quest to eliminate 100 pieces of clutter from my life is to increase my tax deductions for 2009.

I use Turbo Tax's It's Deductible software to track and estimate the value of my donations. One nice surprise I found was that the value of my items is often higher than if I were to sell the item myself. I imagine that's because the thrift stores do such a good job and bringing in the target customer for my used goods.

For example, I donated several perfectly good polo shirts that were valued by the software at $9 each. Considering I only buy clothes when they've been sitting on the clearance rack long enough to gather dust, I most likely spent a lot less than that to buy them new. I consider the cash value of my tax deductions to be 25% of the amount, or $2.25 per shirt in this example. I doubt I could fetch $2.25 at a yard sale.

For me, every $1,000 in donations yields me $250 in cash money when I get my tax refund.

Here's another trick: I keep a lookout for super bargains when I go shopping. That $1 hardcover book at Dollar Tree is worth $4.00 according to It's Deductible. 25% of that is $1, so as long as I keep it in great shape, I'm basically getting to read a free book. Even better, the 10 CD audio-book I bought at Books a Million for $1 on the Clearance shelf last week is worth $8 at a minimum, 25% of which is $2. So here, I get to enjoy the audio version of S is for Silence by Sue Grafton, and make a dollar when I donate it.

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