Whether your donating books because they too heavy to pack and move or out of the kindness of your heart, Uncle Sam rewards you with a deduction on your tax return. However, it's only available if you make the donation to a qualifying charity and you itemize your deductions on your tax return.
You can give your books to whomever, you want, but the Internal Revenue Service will only let you deduct books donated to qualified charities. Qualified charities include, among others, non-profit community organizations, schools, hospitals and literary promotion groups. If you're unsure of whether your organization qualifies, ask it, or search the IRS' online database. Individuals don't count no matter how needy. Sorry, you cannot deduct the books you gave to you grad school roommate even if she's still living off of ramen noodles.
Valuing the Deduction
The starting point for figuring the value of your deduction is the fair market value of the books. However, if you've owned the books for less than one year, you've got to reduce the fair market value by any increase in the price. For example, say you bought children's books for $10 that have a fair market value of $30. If you donate them a week later to a school, your deduction is limited to $10.
Worse, if the group you donate your books to doesn't use your books in achieving its mission, your deduction is limited to the lesser of what you paid for the books or the fair market value. Say you want to donate antique books that you bought for $100 three years ago and are now worth $500. If you give them to a museum that will put them on display, you can deduct the full $500. However, if you give them to a homeless shelter that sells them to raise money, you're limited to deducting just $100.
Get a Receipt
The only time you won't need a receipt is if you donate less than $250 worth of books and getting one just isn't practical --- such as leaving the books at a drop box. Just being in too big a hurry or being forgetful won't count. Any other deductions and you'll need a receipt to claim the tax break. If you donate books worth more than $5,000, you'll also need an expert to appraise your donation.
You won't get a tax break for your book donation unless you itemize on your tax return with Schedule A. That also means you have to use the longest tax return -- Form 1040. On Schedule A, report your deduction as a non-cash donation on line 17. If you're donating $500 or more worth of books, you'll also have to fill out Form 8283 and attach it to your return.
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