How to Value Material Items You Donate for Charity to Nonprofit Organizations
And, you’re not alone. An estimated twenty million Americans contribute good used clothing, furniture, automobiles, and other physical items to these nonprofit organizations.
Another benefit of this type of giving is that you may be able to deduct the value of your donation on the next income tax return you file. But you must first get a blank receipt from the organization you donate the items to. The organization itself cannot determine the values of your contributions. Therefore, you must calculate that for yourself. There is no set formula. Instead, the Internal Revenue Service (IRS) allows you to deduct the “Fair Market Value” of each item. The “Fair Market Value” can be defined as “the amount of money or the price that a buyer would pay for the item.” Obviously the age and condition of each item will have an impact on its value. And, name-brand items- designer clothing must have the tags intact- will have a higher value than a generic brand item.
To help you determine the condition of an item, an item that is considered to be in “good” condition has no wear marks on it. A “fair” rating describes a donation that looks like it has been slightly used or worn. And, a “poor” rating means that an item is well-worn.
Keep in mind that the Fair Market Value will be normally be considerably less than the price you paid for the item too.
You still may have no idea how low or high of a value you need to set on each item you donate. Afterall, claiming a low value will cheat you out of tax deduction dollars. If you claim too high of a value, you could run into problems with the IRS, and you don’t need that. To help their donors calculate fair market values, The Salvation Army has provided a guide on their website at
http://www.satruck.com/ValueGuide.asp. This guide provides low end and high end values for several items that are commonly donated each year.
Some examples of these items include:
Color Television in Working Condition- Low= $75.00, and High Value= $225.00
Jeans- Low= $3.50, and High Value=$12.00
Curtains- Low=$1.50, and High Value=$12.00
Once you have calculated a value for each item you contributed, mark that value on the receipt. Keep the receipt in your files until Tax Time rolls around again.
According to the Internal Revenue Service’s rules and regulations, if your yearly donations total less than $500.00, you can just fill the amount in on Schedule A of your 1040 Income Tax return. Donations of more than $500.00 need to be reported on an IRS Form 8283. This form is used for “Noncash Charitable Contributions”. This form requires you to mark down the approximate dates you bought the items, as well as the approximate prices you paid for them.
If you need more information from the IRS, you should read their publication number 561, “Determining the Value of Donated Property”. It is available on the Internet at http://www.irs.gov/pub/irs-pdf/p561.pdf.
This publications covers donations of Clothing, Household Goods, Jewelry, Paintings, Cars, Boats, Aircraft, Patents, Stocks, Bonds, Real Estate, and much more!
So, before January 31st rolls around again this year, help yourself and your favorite charity both by digging out those old items you don’t use anymore. Then, calculate a value on them, contribute them, and reduce your income tax bill in the long run!
