During the year, but particularly at holiday time, many individuals donate unused clothing and household items to Goodwill, the Salvation Army, and other organizations running thrift shops or helping the needing. Donations to these organizations are tax deductible, but only if certain conditions are met:
One recent case shows you what not to do. A couple donated more than 20,000 distinct items of clothing, shoes, furniture, books, and other household items to Goodwill. They received receipts from the organization showing that a donation was made on a particular date. But the receipts had nothing else; they did not itemize the items donated, indicate the condition of the items or what their value was and how value was determined, or what they cost. The couple used Intuit’s “ItsDeductible” program to prepare a spreadsheet and claimed a deduction of more than $145,000 for items supposedly costing nearly $300,000.
The Tax Court denied their deduction (Mark Robert Ohde, TC Memo 2017-137) for several reasons:
Bottom line: Generosity is admirable, but a tax deduction depends on satisfying strict substantiation rules.
A credit for income taxes paid to a foreign country or U.S. possession. 401(k) plan. A deferred pay plan, authorized by Section 401(k) of the Internal Revenue Code, under which a percentage of an employee’s salary is withheld and placed in a savings account or the company’s profit-sharing plan. Income accumulates on the deferred amount until withdrawn by the employee at age 59?