The Under 40 Financial Planning Guide: Charitable Donations of Property

If you are itemizing deductions, you can easily increase your deduction for charitable contributions and do a good deed at the same time, by donating property to charity. Take all of your old clothes, furniture, books, and other useless personal items to your local Goodwill, Salvation Army, Hospital Thrift Shop or other charitable organization that sells used goods. You can deduct the full value of these goods to reduce your income. Make sure you get a receipt, and ask the charity if they have a sheet to help you to estimate the value of your donations.

If you have $400 worth of clothes that you don't wear anymore, and you are in a 25 percent tax bracket, giving those clothes to charity can generate a reduction of $400 in your taxable income, and a savings of $100 off your tax bill. The catch is that you have to itemize to take advantage of this tax benefit.

I try to do this every year before December 31, as a way of helping the charity, saving money on taxes and clearing out the house for the new year. Bill and Hillary Clinton did this through the 1980s -- and they got in some hot water later for padding the value of Bill's old boxer shorts.

I'm going to resist throwing in the obvious punch line here.

Even if you don't pad your shorts, giving your extra stuff to charity will let you avoid a long painful afternoon of sitting in your driveway trying to sell your old stuff in a yard sale.