At what income level is it worthwhile to track donations, such as clothing to Goodwill?

Question

Growing up, my parents said donation my clothing and other things to Goodwill and like organizations wasn't worth reporting on my taxes because I didn't earn enough throughout the year to make a difference. Now that I live on my own, is there a salary level where donations of this nature will prove beneficial?

Answer 1

It depends on whether or not you itemize your deductions at year end.

If you pay (this list is not totally inclusive but should get the idea across):

Personal Property Taxes
Real Estate Taxes
Casualty Loses
Gambling Loses (only to the amount of gains)
Medical Expenses in excess of 7.5% of your AGI
State Income Taxes or General Sales Taxes
Employee Related Business Expense in exess of 2% of AGI
and most importantly (for the average taxpayer)....
Interest on your personal residence

Then any donation would be probably worthwhile recording.
Otherwise its not worth the time unless your donation combined with the items above are more than the standard deduction.

Answer 2

First, you have to make enough money to owe income tax. Second, you have to have enough Schedule A deductions, other than charitable contributions, to at least equal your standard deduction.

If you satisfy both of these conditions, then charitable contributions will reduce your taxes. Whether you want to go to the trouble of documenting your donations is your choice.

If you itemize anyway, and you are going to owe taxes, clear out a closet or two, list the items and their thrift store value, and take them into the Goodwill. As long as your total is under $500 all you will need is a receipt and the list, in case your return is examined.

It's when you give more than $500 that you have to fill out an extra form, and there is a greater chance that your return will be examined, as the IRS has announced that they are giving more scrutiny to donations, especially used clothing.

Answer 3

It will only prove beneficial to you taxwise if you have enough income to owe taxes, and have enough total eligible deductions to itemize.

Answer 4

When you start itemizing your deductions then you should start keeping track of those donations so that you will be able to use those deductions when preparing your taxes.