The day arrives when you realize your college clothes will never be in style again, or you finally admit you no longer are a size 10.
Don't forget that blue sofa and the cedar chest with the missing leg that cannot make another move.
And what about that extra iron you never use that your neighbors left when they moved to Nepal?
What do you do with all that stuff you feel ruthless enough finally to get rid of?
You can sell the items through want ads, a consignment shop or a garage sale. But if you have little confidence in their marketability -- or little energy for selling something you don't want yourself -- consider giving your closet clean-outs to a charity or charity-operated thrift shop.
(If you are giving away furniture or other large objects, many thrift shops will pick them up.)
Compared to their more glamorous cousins, the run-for-profit consignment shops, thrifts range from dowdy to downright depressing. But for hardcore bargain-hunting, they are hard to beat. A neighbor says her teen-age son's clothing bill hasn't risen above $50 a year since he started outfitting himself at Value Village.
Thrift stores raise funds and provide training and employment for the handicapped and others who are disadvantaged. They also offer goods at prices the needy can afford. The more prosperous can benefit, too, not only from the prices but also by taking tax deductions for any items contributed.
Donating goods to a thrift shop sponsored by a church or a legitimate charitable organization, and taking a tax deduction, can be worth as much in the long run as splitting the proceeds on a consignment sale -- particularly if you are in a high tax bracket.
Let's say you have a winter jacket still in good condition that you bought last year for $80. A consignment shop might try to sell it for $20. If they do, which isn't certain, you might get $10 (not taxable as long as you get back less than what you paid).
If you are in the 50 percent tax bracket, the jacket is worth at least $10 in tax savings, since you can deduct the full $20 -- the fair market value for the jacket -- from your taxable income, thus reducing your taxes by $10. The more valuable the contribution, the greater the tax savings.
Thrift stores don't get many designer dresses, mind you, but some contributed items can represent a substantial tax savings to donors. Goodwill, for example, gets an average of four automobiles a week, for which the owners can take the car's blue book value as a charitable deduction -- and they escape the bother of finding a buyer.
Thrift shops that have sufficient space often get corporate donations of office equipment or furniture from hotels redecorating or closing down.
Who determines the fair-market value of your giveaways? You do.
If you give a box of clothing, the thrift store will generally give you a written receipt for it. If they don't, ask. But you have to decide on the value. Should the IRS raise questions, it's your responsibility to defend the probable market value of what you give.
One way is to see what comparable items are selling for through the classified ads or in thrift shops and consignment stores. Says Rod Young of the IRS: "You look at something and at the condition it's in, and you say, 'Well, it probably won't sell for more than half of what I paid for it.' Basically it boils down to what a prospective purchaser would be willing to pay for it."
You should make an itemized list of your contributions, date it, attach it to the receipt and keep it in your tax files with a note about how you calculated the value of the items. It's unlikely the IRS will quiz you on a shirt you say was worth $5 but which they suspect would bring only $1.50. They are more interested in discouraging a claim of $150 for an item that is obviously worth closer to $15.
On items you claim are worth $200 or more, the IRS expects you to provide a written appraisal of the value and to meet certain other requirements, particularly if you owned them for less than five years. If they appreciated in value, you must allow for capital gains.
For more details, see IRS Publication No. 526, "Charitable Contributions," and Publication 561, "Determining Value of Donated Property," available at the IRS Forms Distribution Centers or by phoning the Tax Information number: (202) 488-3100.