The Tax Value of Donations

Do you know that many that you give to charity are tax deductible? That’s right, you can turn your household goods that you no longer need into a tax benefit. So, as you venture into the depths of the Abyss (also known as the back of your closet), keep track of all the items you choose to donate. It’s you responsibility to report your donation to the IRS.

All items donated must be in good condition or better, according to the new tax law. Previously, you were able to donate goods in fair condition, because you felt it was worth something (We’re talking about you, old sweatshirt), however the new law requires your items be fr from questionable.

There are many computer applications available to help you determine what your donated items are worth, though you can use the traditional time-tested method of pen and paper. You’ll want to compile a list of your charitable goods, and the value of each item as you as it to the goodwill box.

You aren’t required to send the list to the IRS, but you should keep it in a file with the rest of your tax documents. When you take the items to the non-profit organization, be sure to obtain a receipt for your donation. While the receipt won’t list an actual value of your donation, but can serve as proof should you need it during an audit that may occur in the future.

If the value of your noncash donation falls between $250 and $500, you will need a written acknowledgement (hence the receipt) from the nonprofit or charitable organization. This is often the case with vehicle donations, etc. If your donated property totals more than $500, you will be required to fill out Form 8283 in addition to your tax return.