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.

  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.