If you donate goods to a not-for-profit organization, the Internal Revenue Service allows you to deduct the fair market value of the donation from your income when you calculate your tax liability. Donating items that are still usable, such as clothing, electronics and even cars is a way to save on your taxes while helping a nonprofit. Don't just dump your bag of goodies in the Goodwill box without sorting through it first, though -- there are ways to estimate the value of items that will satisfy the IRS if it starts asking questions.
Examine the items you plan to donate with some care. Items that are clean and in good condition have more value than items that must be washed or fixed. Also consider how old the items are. Although items that are dated have less value, an antique could be worth significantly more. If you have any doubt as to whether an item has antique value, consult an expert before you give it away.
Value the item using suggested value guides that can be found online, such as the Valuation Guide for Goodwill Donors and the Valuation Guide for Salvation Army Donors. For example, according to the Salvation Army guide, a woman’s blouse may be valued anywhere from $2 to $12. Consider age, care and condition when you place a value on an item.
Obtain an appraisal for any single item, such as a piece of furniture or a vehicle, for which you are estimating a value of $500 or more. The IRS recommends a formal appraisal at the $500 mark, and it requires an appraisal if you value the item at $5,000 or more. Items such as cars can be valued in one of two ways. If the car is in good working order and the nonprofit organization uses the vehicle, you are allowed to deduct the private-party sale value listed on a website, such as Edmunds, or in a commercial publication, such as the Kelley Blue Book. However, if the organization plans to sell the vehicle, you may only deduct the amount the organization makes from the sale.
- Jupiterimages/Creatas/Getty Images
- What Can I Do if My 1099 Is Incorrect?
- Can My In-Ground Pool Add to My Property Taxes?
- If a Creditor Garnishes Your Wages, Can You Settle With Them?
- How to Report K-1 Amounts on Taxes
- How Can I Lower My Tax Bill With No Dependent?
- How Much to Set Aside for Taxes for Freelancing
- How to Estimate the Cost Basis on Non-Cash Charitable Deductions
- Tips to Sticking to a Budget in Your Twenties
- Can I Deduct My Cell Phone Bill on My Taxes?
- What if I Gave the Wrong Account Number on My Tax Refund?