How to Figure the Value of Charitable Deductions for Tax Return
One of the itemized deductions the Internal Revenue Service permits taxpayers to take is for contributions made to charitable groups. As an itemized deduction, you must forgo the standard deduction and complete schedule A to report your charitable deduction value on your tax return. The amount that you can deduct is valued based on what you contributed and what, if anything, you received in return.
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Instructions
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Check the IRS database (see Resources) to make sure that the group you made your donation to qualifies for a tax deduction. If you contributed to a non-qualifying group, your tax deduction value equals $0 no matter how much you donated.
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Calculate the value of any property that you donated to qualifying charities. For smaller items, you should estimate the fair market value based on the item's condition. Many charitable organizations, such as the Salvation Army (see Resources), publish a list of commonly donated items, giving a price range for each. If any of your items exceed $5,000, you must have them appraised to determine how much you can deduct.
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Calculate the value of any tangible benefits you received from your donation, such as donor's dinners, clothing or other benefits. If you did not receive anything in return, your deduction's value equals the amount of the donation.
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Subtract the value of anything you received in return from the value of your donation to find the value of your charitable deduction that you can claim on your tax return.
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Tips & Warnings
Make sure you keep receipts for your donations so that you can prove your donations in case the IRS audits your tax return.
The IRS forbids tax deductions for household items that are not in "good" condition or better unless your deduction exceeds $500 and you include documentation from an appraiser.
References
Resources
- Photo Credit tax forms image by Stephen VanHorn from Fotolia.com
