Five tips to make the most of your non-cash donations
According to a recent article in USA Today, taxpayers should take into account these five tips when making non-cash donations this holiday season.
- Assess the condition of your items. The IRS says clothing and other household items should be in “good used condition or better” in order to take a deduction. In other words, the items should be in good enough condition to be used or worn by others. If you donate an item worth at least $500 that isn’t in good condition — such as an antique that may be damaged but remains valuable — the IRS says you’ll need an appraisal to document its value.
- Keep records of your donations. Donations of less than $250 should be documented with the name of the charity, the date and location of the contribution, and a detailed description of the donated property. If your donation is worth more than $250, make sure to get a receipt or a letter from the charity which specifies that you didn’t receive any goods or services in exchange for the donation.
- Remember the $500 threshold. Once the value of the donations reaches $500 — including several smaller donations to the same charity that add up to $500 — you’ll need to report the donation on IRS Form 8283. The form asks for details such as when you first bought the donated item and what you paid for it.
- Know when you need an appraisal. Non-cash donations that are worth more than $5,000 require a qualified appraisal, according to the IRS. In this case, you’ll need to hire an appraiser who has been trained and earned qualifications in their field.
- Understand the fair market value. Do some research when you assign a value to a holiday sweater that’s heading for a donation bin. Goodwill and the Salvation Army will provide a value range for household items, such as $4 to $9 for a blouse. To determine an exact value, take a look at what similar articles of used clothing are selling for online or in thrift shops to determine a fair market value.