| Some of the new tax rules that were provisioned by | | | | A good rule would be to deduct the fair market |
| the IRS put restrictions on income tax deductions on | | | | value (value of the item in your local thrift store) of |
| donations, while others were far more liberal and | | | | the item. If, for instance, you bought a pair of shoes |
| forthcoming. It is therefore important that taxpayers | | | | for $40 dollars, you would have to deduct less than |
| learn of the new rules and the different caveats that | | | | $40 if you used them, irrespective of the fact that |
| may apply. Taxpayers are advice to avoid waiting | | | | you may have wore them only once. A woman's |
| until April to learn of these new provisions. | | | | dress may be valued at $4.00 to $19.00 while a man's |
| The rules for charity donation of items such as | | | | pants at $3.50 to $10.00 according to the Salvation |
| clothes, shoes and everyday household items have | | | | Army Valuation Guide at Deduction for items (such |
| change. For or an item to be qualified for tax | | | | as underwear and socks) with low monetary value |
| deduction, it must be in "good used condition or | | | | will be denied. |
| better". The IRS has yet to define what is meant by | | | | Conversely, if an item is valued more than $500, a |
| "good used condition or better", but has promised to | | | | deduction may be permitted even if that item is not |
| issue guidelines as the tax season draws closer. This | | | | in "good used condition or better". However, the |
| provision is effective for all items donated August 17, | | | | taxpayer tax return must be accompanied with a |
| 2006 and onwards. | | | | qualified appraisal from the manufacturer, local |
| This new tax rule is the IRS response to what the | | | | representative or otherwise; and, in addition, the |
| federal government refers to as signs of abuse - | | | | taxpayer must fill Form 8283. |
| taxpayers claiming exorbitant deductions on used | | | | On a similar note, it is recommended that taxpayers |
| items. In 2003 taxpayers deducted about $9 billion | | | | use checks instead of cash when making a taxable |
| for charitable contributions of clothing and household | | | | contribution to community foundations, churches or |
| items on their tax returns. | | | | other charities; that way, a paper trail is created and |
| Taxpayers, however, do not have to be brain | | | | taxpayers can use their bank statement as proof of |
| surgeons to figure out what qualifies as good. | | | | contribution. The IRS will require a receipt for cash |
| Taxpayers will have to take an educated guess and | | | | contribution and it is critical that you obtain a receipt |
| sum up that the old shoes and clothes, which have | | | | in order to be qualified for a deduction. |
| little or no value, surely do not qualify for deduction. | | | | |