Like just about everybody, I'm interested in lowering my tax burden. This idea is definitely workable, but do you see any moral or legal issues with it?

1) Pick-up things people have listed in the "Free Stuff" section on Craigslist.
2) Donate it to a thrift-store run by a charitable organization.
3) Take the tax deduction.

There are at least a few items per day listed in my area that have reasonable values of $25-100 each. People list them for free because they are tired of clutter, or whatever other reason.

There is a thrift-store that is very large right down from my house, run by the Durham Rescue Mission.

Assuming I did this a few times a week, it could really add up and be worth my time. If I am diligent about assigning fair values for my donation, and only donate things that I think the Thrift Store could really use/sell....are there issues?

It seems to me that other people are throwing legitimate tax deductions, and a chance to do a small good deed, out the door.

I could probably resell most of these items for more than the amount the donation saves me in taxes. But, storing and selling these items involves many times more time and effort on my part. Instead, I would be able pick up something at point A, drop off at point B, and never have to worry about storage, listing items for sale, communicating with buyers, etc.

10/26/2008 5:46:09 PM

It's definitely not ethical, but I can't think of why it'd be illegal.

Keep in mind there's a maximum deduction for charitable donations. So it can only help you so much.

[Edited on October 26, 2008 at 5:49 PM. Reason : ]

10/26/2008 5:48:27 PM

you are going to spend more on gas than what you will save on taxes

10/26/2008 5:49:02 PM

The more you work, the more you earn. That might be a better way of looking at it.

10/26/2008 5:49:54 PM

Quote :

"you are going to spend more on gas than what you will save on taxes"

10/26/2008 5:56:07 PM

Quote :

"It's definitely not ethical, but I can't think of why it'd be illegal. Keep in mind there's a maximum deduction for charitable donations. So it can only help you so much."

Why would it be unethical? A simple statement isn't quite enough of an answer.

What is the maximum deduction for charitable donations?

Nevermind, found it. I can donate non-cash property up to 30% of my adjusted gross. Not gonna come close to that.

[Edited on October 26, 2008 at 5:59 PM. Reason : a]

10/26/2008 5:57:05 PM

Quote :

""you are going to spend more on gas than what you will save on taxes""

Not really true, if I only picked up stuff that was worth more than 30 bucks and within 10 miles of my house.

10/26/2008 5:57:52 PM

this only applies to people that itemize their deductions...do you own a house - if not you probably don't itemize - if you don't currently already itemize and see as how you are a student - there is almost no way for this to be worth your time if you don't already itemize because the standard deduction would cancel this out

the max is something like 20 or 30% of your AGI i thought

[Edited on October 26, 2008 at 6:07 PM. Reason : update your profile?]

10/26/2008 5:59:33 PM

I do itemize, though I don't own a house. Recently graduated, not a student.

[Edited on October 26, 2008 at 6:07 PM. Reason : a]

10/26/2008 6:06:58 PM

i don't see this as either illegal or unethical, but a gross waste of time.

as someone else mentioned, you're probably going to spend more in gas than what you'll save in taxes, not to mention the amount of time you'll waste in doing this.

10/26/2008 6:09:07 PM

^As an example, someone had boxes and boxes of free old clothes, all in good condition. There were at least 50 items in there. At the very least, I could value that at $100, keep from paying $30 in taxes, all for an hour of my time and <10 miles in the car.

To get that same amount of income, I would have to work 4 hours at a $10/hr job, once you allow for gas and taxes to get to that job.

If I'm very selective on what I pick up and how far away, it'll work in my favor. And a few hundred bucks at the end of the year is worth it.

10/26/2008 6:13:25 PM

factor in opportunity cost - time spent searching...it becomes less attractive i'm betting

10/26/2008 6:14:41 PM

According to TULIPlovr's profile, he's an econ major.

10/26/2008 6:18:38 PM

Whether it's really worth it fiscally, if this is stuff that's going to get thrown out anyway, then I'd say donating is a good thing.

10/26/2008 6:18:59 PM

You are spending time searching, calling, acquiring, and dropping off items. In that same amount of time, you could be searching for a job that pays > $10 an hour (after factoring everything else in). To me that sounds like a more worthwhile use of your time unless you have a different career path planned.

10/26/2008 6:27:06 PM

^^^^

How exactly are you determining value? You can't just make up numbers that sound reasonable.

You have to be able to prove fair market value to the IRS should you be audited.

If you have a ton of deductions for donations, it's a red flag for being audited as well.

10/26/2008 6:27:11 PM

Quote :

"You are spending time searching, calling, acquiring, and dropping off items. In that same amount of time, you could be searching for a job that pays > $10 an hour (after factoring everything else in). To me that sounds like a more worthwhile use of your time unless you have a different career path planned."

I already have a full-time job that pays well over 10/hr. This would be in my spare time.

Quote :

"How exactly are you determining value? You can't just make up numbers that sound reasonable. You have to be able to prove fair market value to the IRS should you be audited."

Proving fair-market value for good condition old clothes at $2 per item? A) That's easy to prove, because that is what the thrift store sells them for after I donate it. and B) You can pretty much make up your own value. I would do it reasonably, like in this case, but the burden of proof in case of an audit is on me.

Quote :

"According to TULIPlovr's profile, he's an econ major. "

Yes, I was. Problem?

Quote :

"factor in opportunity cost - time spent searching...it becomes less attractive i'm betting"

Do you know how long it takes to make a long look through the free items on CL? About 3 minutes. The thrift store is .5 miles from my house. If I find something worthwhile, it'll be under 10 miles away. Where exactly is my massive wasted time and huge opportunity cost?

[Edited on October 26, 2008 at 6:34 PM. Reason : a]

10/26/2008 6:31:57 PM

it will take you a lot more than 3 minutes to find something on craigslist... for free... thats worth anything... that hasn't already been taken

then you have to arrange a time to get it

then you have to go get it and take it to the place, and you have to do that during hours so they can give you a receipt if you intend on writing it off

Quote :

"Whether it's really worth it fiscally, if this is stuff that's going to get thrown out anyway, then I'd say donating is a good thing."

not always, they hate getting stuff that is too shitty to sell. just makes more work for them to sort through everything to throw out the crappy stuff.

[Edited on October 26, 2008 at 6:39 PM. Reason : ,]

10/26/2008 6:38:00 PM

Quote :

"Why would it be unethical? A simple statement isn't quite enough of an answer. "

The point of the tax is to encourage people who do have resources to donate them, not provide a loophole for you to pay less taxes.

You can justify it as the gov. raping you on taxes anyway, but you're the reason more regulations get put in place to screw things up for everyone else.

On top of that, the people giving them away for free on Craigslist often (maybe mostly?) do so because people in need who that $2/item might go a LONG way for can get for free, and you are denying someone much less fortunate than you this opportunity. If you are absolutely sure the clothes was going to be thrown away anyway, that's different.

10/26/2008 6:38:15 PM

i don't see how it is unethical at all. clearly the people giving it away don't intend on doing anything else with it... might as well be the one to pick it up and donate it to people in need.

10/26/2008 6:51:41 PM

^^ that's really weak reasoning.

10/26/2008 6:54:47 PM

Quote :

"it will take you a lot more than 3 minutes to find something on craigslist... for free... thats worth anything... that hasn't already been taken"

Obviously, this guy is well experienced with looking in the "Free Stuff" section. Going by the fact that he has been watching this for what seems to be weeks, I'm sure he knows the time contraints much better than you do.

Quote :

" There are at least a few items per day listed in my area that have reasonable values of $25-100 each. "

^^^He is providing a service to take the unwanted goods from people who have resources and donating it to a place where the truly needy will go. I'm not quite sure that all the people who need these low priced goods will be checking craigslist, not to mention even have a computer (not likely, but it does exist!!! Shocker!!!)

[Edited on October 26, 2008 at 6:56 PM. Reason : ^]

10/26/2008 6:56:20 PM

Quote :

" I don't see how it is unethical at all. clearly the people giving it away don't intend on doing anything else with it"

What if their intention is for some poor person to get it? I would presume people giving away free clothes have this as their goal.

If they are just trying to clean out their garage, that's a different issue.

10/26/2008 7:08:54 PM

Do people not understand that the federal government has no way of checking your charitable contributions unless your return gets audited?

There is not some magic thing that happens when you go to goodwill to reduce your taxes. You have to take the deduction on your taxes and no one will even ever look at the receipt.

10/26/2008 7:13:33 PM

I don't understand how a typical recent college graduate could possibly itemize and come out ahead. If your taxes are already complicated enough to necessitate itemization there's a hundred other things you could do that would be more fiscally beneficial than this.

That being said, I see no moral or legal qualms provided you can provide a firm rationalization for the fair value that you receipt the donated values at. But like everybody else in the thread I seriously have to question the motivations.

10/26/2008 7:20:53 PM

Simply put, if it is their intention for some poor person to get it, they take it to the thrift store.

The ethics you have to question is the person with ample resources going to the thrift store to buy good product for really cheap just because they like bargain hunting.

10/26/2008 7:30:24 PM

^ thrift stores charge money.

10/26/2008 7:37:26 PM

Sounds like a waste of time and effort.

10/26/2008 7:49:59 PM

What do you spend over $5,150 on a year that is tax deductible?

Quote :

"TULIPlovr All American 2088 Posts user info edit post I do itemize, though I don't own a house. Recently graduated, not a student."

[Edited on October 26, 2008 at 7:55 PM. Reason : V]

10/26/2008 7:52:24 PM

interest on mortgage.

10/26/2008 7:53:43 PM

i'll bet $100 that no one can find anything worth over $25 for free on craigslist in 3 minutes (where things don't fall apart before actually getting it)

10/26/2008 7:54:24 PM

^^

Quote :

"I don't own a house"

10/26/2008 7:58:14 PM

Quote :

"What do you spend over $5,150 on a year that is tax deductible?"

I've always given >10% of my income to charitable organizations, but not for the tax break.

But, in this case, if I can get some smaller tax breaks for relatively little effort, that's also worth it.

Throw in 401k contributions, and my regular 'spring cleaning' that donates a lot of my stuff to charity, and I pay the taxes of someone with less than half my income.

[Edited on October 26, 2008 at 8:08 PM. Reason : a]

10/26/2008 8:03:08 PM

Taxes would be much less of a burden if you just kept that 10% for yourself.

10/26/2008 8:04:58 PM

This is honestly the dumbest thing I have ever heard of.

If you don't value your free time enough to do something you ENJOY doing then at least do something that sucks like working and be productive to society.

Jesus christ when i start using my spare time to save $30 in taxes i will jump off a building.

10/27/2008 2:20:03 AM

It's pretty obvious you're set on doing this. I'm not sure what kind of responses you were expecting to receive on TWW.

10/27/2008 5:34:18 AM

For those claiming it takes more than 3 minutes to search ever heard of an RSS feed? I posted 2 NCSU/FSU tickets for sale and had a dude call me in less than 10 minutes about them. He was from Charlotte in town on business. I asked him how in the hell he found these tickets and he told me he set an RSS feed for NCSU tickets and had it sent to his phone.

In re of poll jobs comment from just above, I typed Free into the search block of Raleigh for sale items and found a kids bike and a console TV for sale posted today.

10/27/2008 8:18:14 AM

So? It's still a dumb idea.

10/27/2008 8:47:24 AM

I agree use the free time to make money rather than coming up with schemes to reduce your tax burden

10/27/2008 8:47:30 AM

Quote :

"So? It's still a dumb idea."

Great comment! You think of that all by yourself?

10/27/2008 9:18:53 AM

Quote :

"So? It's still a dumb idea."

10/27/2008 9:40:40 AM

This thread inspired me to pick up an old $5.00 Powerball ticket from the grocery store parking lot this AM, haha

BTW, those free Craigslist ads are scoured by 100's of people who have nothing better to do than check the web and pick up other people's junk or free items. The people that have them won't hold anything for you as they get dozens of requests to do so.

I put out a bunch of junk at the curb, took a pic, and posted to CL with my address. Within half an hour, all the junk was gone and the ad was deleted, but people kept driving by, even the next day.

10/27/2008 9:54:18 AM

Technically this is not possible. Technically you need to pay taxes on the items you receive for free as "income", therefore by giving them away you are negating this, and not gaining any deductions.

10/27/2008 9:56:01 AM

^ there is absolutely no way to enforce that.

actually that's not true. This would fall under the umbrella of the gift tax, so it would only be an issue if someone gave you free items with FMV > $11,000

[Edited on October 27, 2008 at 9:59 AM. Reason : asdf]

10/27/2008 9:58:07 AM

What ^^ is saying is that by technically this is income, and it would be both unethical and illegal not to report it as such(to answer your original question)...

So technically, if you pick up and item worth $100 and donate it for a $100 deduction, you'd break even

[Edited on October 27, 2008 at 10:12 AM. Reason : s]

10/27/2008 9:59:31 AM

it's not income. it's considered a gift.

http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

and looks like the cap is $12,000 now.

10/27/2008 10:02:24 AM

The reason this would be illegal is you would have to claim each of these items as a gift to be 100% honest on your taxes.

10/27/2008 10:02:49 AM

http://www.irs.gov/pub/irs-pdf/p526.pdf

Page 11

Quote :

"The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. Generally, this rule limits the deduction to your basis in the property. ... Your basis in property is generally what you paid for it."

10/27/2008 10:50:44 AM

Is it ethical for the government to take 1/4 to 1/3 of your income and blow it on a pointless war or use it to bail out irresponsible financial institutions? Fuck 'em! Find any loophole you can to keep as much of your earnings as possible. IMO this is a brilliant idea, just don't overdo it. Claiming more than a few hundred dollars in donations might call too much attention to yourself, especially if you're not a high earner.

10/27/2008 12:20:50 PM

idk i think "brilliant" is too strong of a word

10/27/2008 12:22:08 PM