How to Value Non-Cash Donations

You can place a monetary value on your non-cash donations. Unused household items and clothing are commonly donated to second-hand stores or non-profit organizations. In order to claim a tax-deductible donation on your tax return, you must value your items and donate to a non-profit organization. Some items may not qualify for a tax deduction, but your donation will still help those in need.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• IRS Form 8283
• Receipts

How to Value Non-Cash Donations

1. Determine the condition of your items before donating them. Any broken household items and clothing with tears or stains do not have a tax-deductible value, even though the charity may accept the item.

2. Use the fair market value (FMV) to determine the value of your donations. Locate similar items selling in second hand shops or auctions to determine the price they are selling for, or use the link in the Resources section below to get an estimate for the value of some common items given to charity.

3. Locate receipts for new or unused items that you want to donate. If your item could sell at the cost you paid, then you can use the receipts to put an estimate on the value of your donated items.

4. Use the Automotive Appraisal Services Group (AASG) to appraise a vehicle. Rules do not allow you to appraise your vehicle by the Blue Book estimate; you must have the vehicle appraised by a recognized appraisal service and the Department of Motor Vehicles (DMV) must recognize the vehicle.

5. Deduct donated items in bad condition on your tax return if the appraised item has a FMV of $500 or more. Find an approved or recognized appraisal service to value your item and attach the appraisal with your tax return.

6. Include appreciation when valuing non-cash items. Up to 20 percent of your adjusted gross income is tax-deductable if you expect your donation to appreciate in value.

7. Fill out IRS Form 8283 for all of your donations. Have the charity sign Section B of the form if your donated item is worth more than $5,000; otherwise you do not need the charity's signature, and you must complete Section A on your own.

Tips & Warnings

• You must be eligible to itemize on your tax returns in order to qualify for a tax deduction. Charities do not give appraisals for your donations. The charity will offer you a receipt as acknowledgement, but will not offer an estimated value for your items. Consider wholesome giving to those in need without getting a receipt from the charity.
• Be sure to fill out Form 8283 correctly in order to avoid an audit. Check the IRS website to find out which charitable organizations qualify for a tax deduction, or you may not qualify for a tax relief.

Resources

• IRS Rules for Charitable Contributions
• IRS Rules for Non-Cash Contributions
• Find a Charity Eligible for Tax-Deductible Donations
• Estimated Value of Common Items

[rea1901]

on 8/1/2009 Good article, but it does not explain if a deduction can be taken for donating unused medicines, and if so how to determine the non-cash value. Can someone answer these questions?