The Surprising Way You Can Score a Last-Minute Tax Break This Year

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  • If you itemize on your tax return, you're entitled to certain deductions.
  • You can score a tax break by donating not just money, but also goods like toys, games, and clothing.

It's an opportunity you don't want to pass up.

We all have our share of things we're not fans of. For me, two of those things are clutter and taxes. It bugs me to have a messy home, and it bothers me even more so to pay the IRS even a dollar more than I have to.

Thankfully, I've discovered a way to tackle both of these issues in one fell swoop. And if you're looking to score a last-minute tax break this year, I suggest you follow my lead.

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Decluttering could lower your taxes

In my household, we make a point every year to do a massive sweep of our basement before the holiday season kicks in. Our basement is where my kids' toys and games are located, and I like to do a cleanout before the holidays to make room for incoming gifts.

Year after year, I inevitably find that we have plenty of items in good condition that someone would probably appreciate. And that's why we make a point to donate gently used (or in some cases, unopened) toys, games, and devices my kids have outgrown.

At the same time, the holiday season is when I tend to also donate clothing that my kids have outgrown. Granted, some of their clothing gets so worn out that I end up having to throw it away, but anything in decent condition lands in the donation pile.

Once our giveaway haul is ready, we'll take it over to a charitable organization and get a receipt confirming our donation. And that's a receipt I always make a point to keep. The reason? It can serve as a tax deduction.

If you itemize on your tax return, you're probably aware that you can deduct cash donations you make to a registered charity. Well, the same holds true for donated goods. The rules are just a little bit different for those items.

How to claim a tax break for donated goods

If you write out a check for $100 to a registered charity or use your credit card to make that $100 cash donation, the rules are pretty straightforward -- you can claim a $100 deduction on your tax return. Donating goods is a touch more complicated. That's because you're not allowed to deduct the original value of donated items. Rather, you can only deduct their fair market value, which is the amount they'd sell for in their current condition.

So as an example, let's say your children outgrow a small table and chair set you bought for $80, only by the time you're donating it, it's showing signs of wear. Its fair market value might only be $30 at the time of your donation, so that's the amount you'd get to deduct. But still, you might as well claim that tax break.

Declutter and save at the same time

The holiday season is a great time to do a cleanout at home and donate items you no longer need. It's also a great way to lower your tax bill before the year wraps up. And so all told, it's a win-win.

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