Wednesday, February 8, 2012

Tax Prep Part 1

It is the first full week in February and for the last 7 years I have always had our taxes filed by now. As it is, I am still gathering documentation! I feel like a complete slacker.

I would have had them done at least two weeks ago when we received the last of our tax documents, but this year we are trying to squeeze every dime out of our taxes by doing something we haven't done before.

Charitable donations made to agencies like Goodwill. (See here for complete details).

Non-cash donations must be made in "good used condition or better" and must be documented with a receipt showing the charity name, date, description and value.

If the total of non-cash donations for the year is under $500.01, then just the charity name and value is then shown on the tax return.

If the total of non-cash donations for the year is over $500 and under $5,00.01 then more information must be listed: full address of the charity, age of the donated property, original cost, how it was originally acquired, and a description on how the current value was determined (independent appraisal, looking at comparable sales, using the thrift shop value, etc.).

In previous years we have donated less than $500 in non-cash items to Goodwill. This year we know it is much more. We are talking about 4 large van trips. For each of those trips I itemized our donation, took pictures, and got receipts from Goodwill. What I haven't done yet is calculate the "thrift-store value".

We use Turbo Tax to prepare out taxes. I used to pay someone to do them for me because I thought they were too difficult. More specifically, they must be too difficult for some many places to charge ridiculous amounts of money to process them for you. What I figured out is that I am just as qualified as most people to process my particular type of return. We don't have weird stuff. We have mortgage interest, charitable donations, and this year student loan interest. No dividends, no capital gains, no gambling losses. Our taxes are pretty straight forward. Anyway, Turbo Tax has an application built in to it that calculates the donated value of non-cash items. I just have to put my itemized list in there. I have been dreading that part. Oh, and I am crazy busy trying to get our house ready. But today is the day to start working on those pesky taxes!

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