PSA: That 'donate everything' advice is costing people money at tax time

I helped a friend sort their garage last weekend and they had bags of stuff ready for Goodwill. I asked if they kept receipts or logs for donations and they looked at me like I was speaking another language. They had no idea you have to itemize donations over $250 and assign fair market value. Last April they claimed $3,000 in donations on their taxes and got flagged. They spent 6 hours on the phone with the IRS. If you are decluttering for a fresh start, please take pictures of big items and write down what you gave. It takes 10 minutes per trip and saves you a headache later. Has anyone else run into this?

4 comments

4 Comments

thomas_torres1mo ago

Oh man, this brings back a memory! My uncle was the king of donating stuff without any records, and one year he claimed like $4,000 in clothes and old electronics from cleaning out his basement. The IRS made him provide photos and receipts and he had nothing. He ended up having to take a smaller standard deduction instead. @karenh56 your photo tip is solid, I started doing that after watching him stress out for weeks. I just snap a quick picture of the pile on my driveway before I load it up, then email it to myself with the date and a rough value. Saves so much hassle.

miles_hall1mo ago

Actually that reminds me of something that happened to my neighbor... he was super organized about donations, kept everything in a spreadsheet and took photos like @karenh56 suggested. But one year his phone died and he lost all those pictures. Had to scramble to recreate the list from memory and the IRS was not having it. They flagged his return and he spent months trying to piece together what he gave and where. He even drove back to Goodwill begging them to look up his donation history but they said they don't track individual dropoffs like that. So now he prints the photos right after he takes them and sticks them in a folder with a handwritten note. Old school but it works.

kimr741mo ago

My buddy Mike got burned on this two years ago. He cleaned out his mom's house after she moved to assisted living and dumped everything at Salvation Army without a single receipt. Claimed about $2,500 in deductions and the IRS made him prove it all. He ended up having to call the thrift store manager who vaguely remembered seeing him with furniture but couldn't write a letter saying exactly what. @karenh56 you're dead on about the photos - that's exactly what my tax guy told me to do after Mike's mess. Mike still gets tight-lipped if you bring up tax season around him.

karenh561mo ago

Honestly I used to be one of those people who just dropped bags off and called it a day, thinking the tax write off was automatic or whatever. But then a few years back my cousin got audited over a similar thing and had to dig through all these old receipts she never kept, it was a total nightmare. That really changed my mind because I realized the IRS doesn't just take your word for it, especially if you claim a decent amount. Now I make myself take a quick photo on my phone of the stuff before I drop it, and I jot down what it is and an estimated value. It's a little annoying but way better than getting a letter in the mail later asking for proof.

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