Do good AND increase your tax refund
One of the surest ways to increase your tax refund is through charitable contributions. Charitable contributions are still a 100% itemized deduction in the U.S. tax code for 2011.
Many of us therefore have ‘gold’ sitting in our closets, garages and basements. You have unused (but good quality) clothes that once graced us, appliances never really used, old cellphones and furniture now replaced and many other items that can be donated to charity.
OK, so you want to do this before January 1, 2012 in order to ensure they are accounted for in the current tax year.
Take an inventory of all your items to be donated and find a charity such as Goodwill, Salvation Army or your local thrift store. Create a list or spreadsheet with all the items and their value, based on old receipts or store valuations.
If you want to check the efficiency rating of your chosen charity, go to charitynavigator.org and enter their name. This will let you know how well they use their resources.
When you are done, you can haul off your donations to the charity or in some case, they will stop by and pick them up for free.
The most important thing is to obtain a receipt or document from the charity acknowledging your donation. While most will not give a valuation for your items, be sure to itemize your donation on their receipts.
The importance of this documentation will become apparent in the hopefully unlikely event you are audited. Documentation and honest valuation are key. In the case of donating a car for example, the Kelly Blue Book value would be acceptable.
For clothes or furniture, second hand valuations or an acceptable depreciation (loss of value of a certain percentage a year) are acceptable.
So, clear your home, give generously to others, tally up all you donations and increase your IRS refund all in one fell swoop. Do it today.
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