Make the most of your non-cash donations this holiday season
Many New Year resolutions involve clearing unwanted items out of the house. Here are five tips taxpayers should consider when making non-cash donations in an effort to keep your New Year Resolution:
- Assess Item Condition: Ensure items like clothing and household goods are in “good used condition or better,” as per IRS guidelines. Items valued at $500 or more, even if damaged but still valuable (like certain antiques), require an appraisal for documentation.
- Keep Detailed Records: For donations under $250, maintain records including the charity’s name, donation date, location, and a thorough description of the property. Donations over $250 require a receipt or acknowledgment from the charity specifying no goods or services were received in exchange.
- Threshold Reporting: Once cumulative donations to the same charity exceed $500, including multiple smaller donations, report them on IRS Form 8283. This form requires details such as the purchase date and cost of donated items.
- Appraisal Requirements: Non-cash donations exceeding $5,000 in value necessitate a qualified appraisal by an appraiser with proper credentials and training in the relevant field.
- Fair Market Value: Research the fair market value of items being donated. Organizations like Goodwill and the Salvation Army provide general value ranges for household items. To determine precise values, consider similar items’ prices in online marketplaces or thrift stores.
These tips will help ensure compliance with IRS regulations and maximize deductions for non-cash charitable contributions. For information on tax compliance when donating items, please contact a ShindelRock tax professional.