While you
were “stuck” at home did you decide to clean out your closets? Since yard sales are no longer an option in
many areas you can still make some money from your unwanted “stuff” by donating
it to a qualifying church or charity.
Obviously, you
will only receive a tax benefit from donating your “unwantables” if you are able
to itemize.
Here are
the rules for donating used items to charity,
You can claim
a deduction for the “fair market value” of used appliances, books, clothing,
computer hardware and software, electronics, furniture, household items, toys,
videos, etc., etc. donated to a qualifying church or charity. According to the IRS, fair market value is
the price a “willing, knowledgeable buyer would pay a willing, knowledgeable
seller when neither has to buy or sell.”
You are
responsible for determining the fair market value of the items you are
donating. The charity to which you make
the donation is not required to provide you with a value.
The same
rule as discussed above for cash donations applies if the total value of
“non-cash” items donated to a charity in a single day is more than $250.00.
You must
complete and attach to your Form 1040 IRS Form 8283 if you are deducting
“non-cash” contributions totaling more than $500.00. The following information will be needed –
• the name and address of the charity(ies) to
whom you made the donation(s),
• the date of the contribution(s),
• the fair market value of the items donated,
and
• how you determined the value – i.e. “Salvation
Army valuation guide”
If any one
individual item has a value of more than $500.00 you must also list -
• the date you acquired the property
• how you acquired the property – i.e. purchase,
gift, inheritance, exchange
• the cost or adjusted basis of the property
If any one
individual item has a value of more than $5,000.00 you must provide a written
appraisal of the item and complete Section B of IRS Form 8283. The appraisal must be made by a “qualified”
appraiser who has earned an appraisal designation from a recognized
professional organization, or has otherwise met minimum education and
experience requirements prescribed by IRS regulations, regularly performs
appraisals for compensation, demonstrates verifiable education and experience
in valuing the type of property being appraised, and has not been prohibited
from practicing before the IRS at any time during the 3-year period prior to
the date of the appraisal. To find a
qualified appraiser go to www.appraisers.org, the website of the American
Society of Appraisers. The cost of the
appraisal is not included in the amount of the charitable donation.
Whenever you
contribute used items you should always make and keep a detailed listing of
what you have donated with the condition and value of each set of items (i.e. 6
pairs of men’s pants, good condition, $60.00, 5 pairs of men’s shoes, good
condition, $75.00). You may want to
attach a copy of the listing to Form 8283 when filing your Form 1040.
You cannot
deduct the contribution of a used item of clothing or household item unless the
item is in at least "good" condition.
Donations of clothing and household items with a minimal monetary value,
such as used socks or underwear, are also not deductible.
If you
contribute new food, toys, clothing, or other items you can deduct the actual
cost of the items donated. The same
reporting and documentation requirements discussed above for used items will
apply. You should make a separate
purchase of the items you will donate – don’t group together with the purchase
of personal use items – and save the store receipt.
Here are
links to sites that provide suggestions for valuing donated items –
GOODWILL
THE TAXBOOK
THE BALANCE WEBSITE
TTFN