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NON-CASH CONTRIBUTIONS

While you were “stuck” at home did you decide to clean out your closets?  Since yard sales are no longer an option in many areas you can still make some money from your unwanted “stuff” by donating it to a qualifying church or charity. 

Obviously, you will only receive a tax benefit from donating your “unwantables” if you are able to itemize.

Here are the rules for donating used items to charity,

You can claim a deduction for the “fair market value” of used appliances, books, clothing, computer hardware and software, electronics, furniture, household items, toys, videos, etc., etc. Donated to a qualifying church or charity.  According to the IRS, fair market value is the price a “willing, knowledgeable buyer would pay a willing, knowledgeable seller when neither has to buy or sell.”  

You are responsible for determining the fair market value of the items you are donating.  The charity to which you make the donation is not required to provide you with a value.

The same rule as discussed above for cash donations applies if the total value of “non-cash” items donated to a charity in a single day is more than $250.00.

You must complete and attach to your Form 1040 IRS Form 8283 if you are deducting “non-cash” contributions totaling more than $500.00.  The following information will be needed –

  the name and address of the charity(ies) to whom you made the donation(s),

  the date of the contribution(s),

  the fair market value of the items donated, and

  how you determined the value – i.e. “Salvation Army valuation guide”

If any one individual item has a value of more than $500.00 you must also list -

  the date you acquired the property

  how you acquired the property – i.e. purchase, gift, inheritance, exchange

  the cost or adjusted basis of the property

If any one individual item has a value of more than $5,000.00 you must provide a written appraisal of the item and complete Section B of IRS Form 8283.  The appraisal must be made by a “qualified” appraiser who has earned an appraisal designation from a recognized professional organization, or has otherwise met minimum education and experience requirements prescribed by IRS regulations, regularly performs appraisals for compensation, demonstrates verifiable education and experience in valuing the type of property being appraised, and has not been prohibited from practicing before the IRS at any time during the 3-year period prior to the date of the appraisal.  To find a qualified appraiser go to www.appraisers.org, the website of the American Society of Appraisers.  The cost of the appraisal is not included in the amount of the charitable donation.   

Whenever you contribute used items you should always make and keep a detailed listing of what you have donated with the condition and value of each set of items (i.e. 6 pairs of men’s pants, good condition, $60.00, 5 pairs of men’s shoes, good condition, $75.00).  You may want to attach a copy of the listing to Form 8283 when filing your Form 1040.  

You cannot deduct the contribution of a used item of clothing or household item unless the item is in at least "good" condition.  Donations of clothing and household items with a minimal monetary value, such as used socks or underwear, are also not deductible.

If you contribute new food, toys, clothing, or other items you can deduct the actual cost of the items donated.  The same reporting and documentation requirements discussed above for used items will apply.  You should make a separate purchase of the items you will donate – don’t group together with the purchase of personal use items – and save the store receipt. 

Here are links to sites that provide suggestions for valuing donated items –

GOODWILL      

THE TAXBOOK

THE BALANCE WEBSITE  

TTFN










This post first appeared on THE WANDERING TAX PRO, please read the originial post: here

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NON-CASH CONTRIBUTIONS

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