I don't sell my quilts, I give as gifts, or to charity. I make an average of 50-75 quilts for the NICU unit a year. According to the IRS you can deduct donations of handmade goods, but you can only deduct what it cost you to make the item, not its fair market value. You can deduct only the cost of the materials. You are allowed to deduct out-of-pocket costs but not the value of your labor. If you itemize this might be a good idea. However, keep receipts of your materials used in your charity quilts. The NICU unit gives me a yearly donation form. I've never used it for a tax deduction. The feeling of pleasure I get is priceless!
I've also have gone to yard sales where people were selling or giving away handmade items. One time I saw a beautiful crocheted afghan and when I asked "how much" was told "free...my MIL made it for us and I hate it". I have this afghan on the foot of my bed and use it to cuddle up with on frosty days. It is a shame people don't realize how much love is put into making a handmade gift.