When you donate something that isn’t straight cash, you are responsible for recording its value if you want to get a deduction for it when you file taxes for the year. Because much of what we donate is used, we cannot record its original value, so unless something is very valuable and requires appraisal, you will have to go with a standard estimate. I have shared these donation value estimates below, and will also walk you through what you need to know when getting higher value donations appraised, as well as the process of filling out the correct tax forms to ensure you get the deduction you deserve.
You might think that all this record keeping is a hassle, but I assure you, it can be a very easy process. I’ll show you how to be organized with your donation value records right off the bat, so that when tax season rolls around, you’ll be all set to go!
Estimating Value of Donations Less than $500
If the donations you make total less than $500, you do not need special appraisal and can just go with stock donation value estimations when keeping records of the clothing, furniture, sporting goods, or other sundry things that you give to charity.
Below are some tables detailing the general donation values for the basic things one would expect to donate: clothing, linens, sporing equipment, sundry household items, and furniture. We’ll talk about the tax donation values of larger items below. These estimates are based on Goodwill ranges, so you can trust that these are from a major, reputable source (in other words, I’m not just pulling these out of thin air, and because I’m using these for my own personal tax records, I will be careful to update these numbers over time).
Determining the Value of Food Donations
If you are donating food, it is a bit harder to determine the fair market value- it might not be exactly what you paid for it (it’ll typically be less) because shelters are often able to get goods at a discount. When you donate food, the person accepting it from you on behalf of a nonprofit org will issue you a receipt with an estimate of the value of the food you have donated. That should serve as a pretty fair estimate, so you shall need to do no further calculations from there.
A Word from the IRS
The IRS has its own special guides and lingo when it comes to determining the value of donated goods, and while they don’t give a lot of convenient, hard and fast numbers like the Goodwill does, their advice is still worth bringing up here, if not because they are the utlimate authority, but also because the explain the basis for Goodwill’s estimates.
The IRS explains that tax donation values must be the Fair Market Value, aka FMV. The fair market value of an item is the price for which it could be sold in the open market. These prices depend on many factors – the condition of the item, the current market, the use for that item, and the style of the item.
If the thing you have donated does not have an estimated value range in one of the tables above, just research what that item (in a comprable condition) is being sold for elsewhere. You might also factor in expert opinion and replacement cost.
Tax Donation Values for Larger Donations
If you are donating something or a bundle of similar items that have a value greater than $5,000 (or $500, if you are donating clothing or furniture), things get a bit more complicated.
You will need to have a qualified appraisal document made by a qualified appraiser, and you’ll also need to fill out and attach Section B of Form 8283 to your tax return (this isn’t the case with some stock, vehicle donations, patents, some securities, and some corporation-donated inventory or property).
So what is a “qualified appraisal document?” Generally, it…
is made in accordance with the government standardsMeets the requirements of “Regulations section 1.170A-13(c)(3) and Notice 2006-96 I.R.B 902” (what a mouthful!)Relates to an appraisal made within 60 days of the donationIncludes the requisite info (description of the property, condition of the property, the date of the donation, the terms of the donation, the name, address, and ID number of the appraiser, the appraiser’s qualifications, a statement that the appraisal was created for tax purposes, the date of the appraisal, the Fair Market Value determined on the date of the expected donation, and the basis for valuation- art objects require additional info, including size, subject, artist name, history, etc…)The appraisal document does not typically have to be attached to Form 8283 Section B, but you need to hold on to it for record keeping purposes. If your donation is greater than $20,000 worth of art, $500,000 worth of property, $500 worth of clothing or furniture, you WILL need to attach the appraisal.
The Tax Forms to Fill Out
If the value of your donation is less than $500 (or $5,000, if said donation is for non-furniture and clothing items), you will only need to record their value on Schedule A of Form 1040. Schedule A is also the place where you would claim deductions for medical expenses, interest paid, losses to theft, and the like.
If the value of your donation is above the requisite thresholds, you will, as I stated above, need to fill out IRS Form 8283, and if the value is VERY high, you will also need to include a copy of the appraisal document in the bundle of happy paperwork you cast toward the IRS.
At first it might seem like a bit much to take in, but the paperwork is rather straightforward once you get over the initial shock.
The best way to approach the process of making sure you get the tax deduction for your donations that you deserve is to keep a spreadsheet for all of the donations (and values of those donations that are non monetary), as well as all receipts and paperwork involving the donations you made, in a folder in a safe place or on your computer. When tax season rolls around, you’ll be all set to fill out the requisite paperwork since all the information you need is organized in one convenient place.