Itemizing deductions on your tax return can help you reduce your tax liability. When you donate items to a qualified 501(c)(3) organization, you can take a deduction for these items on your tax return. The IRS requires goods to be in "good used condition or better" or be supported by an appraisal before you can get a tax deduction on them.
Computing Fair Market Value
Fair market value is the price that a good sells for in an open market when there is a willing buyer and seller. The IRS considers many factors when determining the fair market value of a donated cabinet, including its original cost, its condition, sales of similar cabinets, the cost to replace the cabinets, the amount for which the charity can sell the cabinets and whether the cabinets are still in style.
Using Objective Guides
Several charitable organizations have guides that list the standard price for common donations, including kitchen cabinets. You can use these guides to help you figure out the fair market value of the item. For example, Habitat for Humanity values base cabinets between $25 and $75 and wall cabinets between $15 to $50. If you have a china cabinet in your kitchen you want to donate, Salvation Army lists the fair market value of china cabinets between $80 and $300. Goodwill lists the fair market value of china cabinets between $40 and $150.
Recording the Value
If your claimed deduction is greater than $500, you need to complete Form 8283 and attach it with your tax return. You must also obtain a written acknowledgment from the organization at the time you donate the cabinets, if your donation is worth more than $250. The acknowledgment should list the description of the property, the date that it was donated and a good faith estimate of the value of the donation. You should also keep written records of the price you paid for the cabinets and the manner in which you received them.
Tax preparation software programs can help you determine the value of the cabinets that you have donated. An appraisal, however, is required for certain deductions, including deductions for cabinets that are not in good used condition or better and are worth more than $500, or cabinets that exceed $5,000 in value. Cabinets that are old or unique may have a higher value. Getting an appraisal from an expert may help you get a larger deduction for these types of cabinets.
- Internal Revenue Service: Publication 561 - Main Contents
- Goodwill: Tax Deductions
- The Salvation Army: Valuation Guide for Salvation Army Donations
- Habitat for Humanity Metro Restores: Donation Valuation Guide
- Decicco, Gulman & Company, LLP: Will Your Charitable Donations Stand Up to "Substantiation?"
- Internal Revenue Service: Form 8283: Noncash Charitable Contributions
- Internal Revenue Service: Topic 506 - Charitable Contributions
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