The value of items you donate to charity are usually deductible on your income tax return in the year you make the donation. This is a great way to help your favorite charity and receive a reduction in taxable income, which essentially lowers the amount of tax you pay on your income. To take the deduction, though, you must determine the price of the things you donate. Deductible donations include gifts by cash or check, and donations of household, clothing and other items to qualified charities. You may not deduct the value of time spent volunteering for a charity.
Cash or Check Donations
Verify your donation is made to a qualified organization. You may not deduct gifts of money or other items to political, lobbyist, civic, sports clubs, labor union or social clubs. Social clubs include chambers of commerce, fraternal orders and country clubs. If you donated to one of these organizations, your donation still has a monetary value, but is not tax deductible.
Obtain a receipt from the organization or locate your canceled check or credit card statement showing proof of the donation. The amount from your receipt or record shows the total dollar amount you gave the charity.
Subtract the value of any benefit or gift you received as a result of the donation. For example, if your donation includes a meal or similar entertainment event from the charity, you must subtract the value from your donation. Most organizations let you know the value of any entertainment or personal benefit you receive on the receipt they provide. If you’re unsure, contact the charity and ask if you received a benefit from your donation. The result is your tax deductible amount.
Make a list of items you donate to charity. Use this list to determine the fair market value of your donation. The fair market value is the price someone would pay to re-purchase the item, not the price you originally paid for the item.
Obtain a value list from a resource recognized by the IRS as a qualifying organization. For common household item and clothing donations, you can use donation value guides from charities such as the Goodwill Industries, the Salvation Army and ARC. These thrift stores assign thrift store values to donated items frequently received. You can find the value lists on each of the charity’s websites.
Obtain appraisals or additional proof of your donation if required. If you donate a vehicle, boat or airplane worth more than $500, the organization you give the item to must give you a statement that notes the fair market price of your donation. If your donation is worth more than $5,000, you must get an appraisal for the item by a qualified appraiser who has no affiliated interest in your donation. Your appraisal notes the fair market price of the donation.
Items you will need
- Donor receipt
- List of items donated
- What are the Tax Breaks for Donating to Charity?
- Tax Rules for In-Kind Services & Donations
- Tax Deductibility of Designated Gifts
- Ideas on Non-Cash Donations
- Tax Laws on Church Donations
- How Much of Non-Cash Donations Are Deductible on Income Tax?
- Information Needed for Charitable Deductions for Tax Returns
- About Furniture Donation Tax Credits