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George Saenz, the Bankrate.com Tax Talk columnistNew rules on charitable donations

Dear Tax Talk,
I was told that the law changed on donations to Goodwill and Salvation Army and that you won't be able to deduct your contributions anymore. How does the new law work?
-- Felicia

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Dear Felicia,
Well, believe it or not, our Congress doesn't want you to donate your used underwear to Goodwill for a tax write-off. The new rules simply codify what is common sense. The new rules state that, to claim a deduction for a household item or clothing, the items have to be in good condition or better.

In addition, the law allows the Internal Revenue Service, by regulation, to deny a deduction for the donation of clothing or any household item that has minimal monetary value. This will probably mean that you won't be able to claim a deduction for used underwear and socks.

The new rules add the additional burden of defending the condition of your donated items. This may necessitate taking dated photographs of the donated items and perhaps filming their drop-off at the Goodwill. More likely than not, the IRS will probably not want to get into fussing with your deduction if your return otherwise checks out OK.

To ask a question on Tax Talk, go to the "Ask the Experts" page, and select "taxes" as the topic.

Bankrate.com's corrections policy -- Posted: Oct. 6, 2006
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