How to Figure Fair Market Value for Donations of Property to Charities

If you donate physical items - a couch, refrigerator, clothes, etc. - to a qualified charity that will use the donation to further its exempt purpose, you can take a tax-deduction value equal to that of the donated items "fair market value." Fair market value is the amount of money at which property would sell between a willing buyer and seller.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• IRS Forms
• Calculators
• Bank Account
• Tax Preparation Software
• Calculators

1. Claim as the value of donated goods the price that buyers of used items actually pay in used stores, such as consignment or thrift stores, if you are donating used clothing or household goods.

2. Consult a blue book guide that lists values for similar makes and models if you are donating cars, boats or aircraft. Adjust your estimate for unusual equipment, mileage or physical condition

3. Ask the charity for an itemized receipt for the items, regardless of whether they are worth $25 or $250, to protect yourself in case you are ever audited.

4. Attach Internal Revenue Service Form 8283 to your return, giving the name and address of the recipient organization, a description of the property contributed, the date the property was acquired, how the property was acquired and its fair market value if the gift's value is over $500.

5. Get an independent qualified appraisal done and attach a copy if the value exceeds $5,000.

Tips & Warnings

• If donating a boat, base your estimate on a marine surveyor's appraisal.
• It's wise to back up your numbers by including receipts, canceled checks, photographs or other relevant evidence. Articles in magazine or in newspapers, photographs that show the item and statements by the recipients of the items also can come in handy. But these should not be included in your tax return.
• Special rules apply if you contributed the following: property that has increased in value, property that has appreciated because of its age or rarity; inventory from a business; property subject to a debt or partial interest in or a future interest in personal property.

[DavidAnderson]

on 12/19/2008 If you donate items to any charity, the best way to maximize your donation is to find the individual fair market value of each item and make a detailed list of your donation. Don’t just claim a bag of clothes and a few hundred dollars on your tax return. The IRS allows you to deduct the full fair market value of any item you donate, but they don’t provide you with a way to determine those values.

If you only have a small number of donations then use the free salvation valuation guide: http://www.salvationarmysouth.org/valueguide.htm

If you do your own taxes using Turbotax, then use their Itsdeductible software that integrates your charitable donations into the tax software. It requires you to purchase TurboTax to view the results: www.itsdeductible.com

If you have an accountant or tax professional do your taxes, then I would recommend: www.charitydeductions.com They use

[DavidAnderson]

on 12/19/2008 If you donate items to any charity, the best way to maximize your donation is to find the individual fair market value of each item and make a detailed list of your donation. Don’t just claim a bag of clothes and a few hundred dollars on your tax return. The IRS allows you to deduct the full fair market value of any item you donate, but they don’t provide you with a way to determine those values.

If you only have a small number of donations then use the free salvation valuation guide: http://www.salvationarmysouth.org/valueguide.htm

If you do your own taxes using Turbotax, then use their Itsdeductible software that integrates your charitable donations into the tax software. It requires you to purchase TurboTax to view the results: www.itsdeductible.com

If you have an accountant or tax professional do your taxes, then I would recommend: www.charitydeductions.com They use

[DavidAnderson]

on 12/19/2008 If you donate items to any charity, the best way to maximize your donation is to find the individual fair market value of each item and make a detailed list of your donation. Don’t just claim a bag of clothes and a few hundred dollars on your tax return. The IRS allows you to deduct the full fair market value of any item you donate, but they don’t provide you with a way to determine those values.

If you only have a small number of donations then use the free salvation valuation guide: http://www.salvationarmysouth.org/valueguide.htm

If you do your own taxes using Turbotax, then use their Itsdeductible software that integrates your charitable donations into the tax software. It requires you to purchase TurboTax to view the results: www.itsdeductible.com

If you have an accountant or tax professional do your taxes, then I would recommend: www.charitydeductions.com They use

[PaulNewbieU]

on 4/16/2008 IRS publication 561 (http://www.irs.gov/pub/irs-pdf/p561.pdf) specifically addresses how to determine the value of donated property.

on 12/30/2005 You can download the official IRS publication 526 at the official IRS website: www.irs.gov. It is fast read and provides good information about how to value things you donate.