Donations and tax write-offs when downsizing
I’ve filed my taxes. And I have a few words of advice:
If you are planning to downsize and someone encourages it because of the tax write-offs, don’t listen. After donating 2000 pounds of stuff in 2012, when I did my taxes I didn’t itemize for the first time in many years.
My initial fear was that itemizing 2000 pounds worth of donations might result in an audit. I’m sure the IRS auditors don’t generally see that dramatic a write-off. Or at least they haven’t ever seen anything like that from me.
When I actually did my taxes, though, I ran into another, more interesting problem I hadn’t considered before: I’d sold my big house. Which means that $1400 write off for property taxes wasn’t a part of this year’s itemization. Neither was a mortgage. Nor were any previously considered capital improvements. Along with one other previously itemize-able lifestyle change, these added up to less than the standard deduction for the first time in more than ten years.
Do I regret downsizing? Not at all. I’m as happy now as before I filed. But I was surprised. In reality, it was somewhat a pleasant surprise, because without itemizing, there will be less chance of an audit.
Of course, the fact that I couldn’t itemize this year also means one other thing: I didn’t spend the money to begin with, so even though I will pay more in taxes this year, I spent far less, as well. And am happier for it.