So you are preparing your income taxes or getting your information ready for your tax preparer and you are wondering what value to place upon that load of household items, clothing and furniture you gave to charity. Valuing noncash contributions is a common problem. Your tax preparer should not value them as the preparer has not seen the items, does not know the brands and is seldom an expert on the value of used property.
Options for valuing noncash contributions
- Go into a local thrift shop such as The Dorcas Shop, Goodwill or Salvation Army and look at the prices they charge for items similar to what you are giving to them. Often they will have a price list posted and you can start with that.
- Try Fun With Taxes valuation table, remember your donation is based on local values which is why they show a range
- Salvation Army Valuation guide, again remember you need the value in your area
- Check online used prices at places such as eBay
- Try local consignment shops
- Intuit offers an online calculator called ItsDeductible (TM ). Intuit even has a mobile app for Apple.
What not to do
- Do not include any value for items that are not in good or better condition. Actually, just throw those items out as most charities do not want things in bad condition. You can include items that are not in good used condition if you have a qualified appraisal and the value is more than $500. A qualified appraiser is generally licensed and charges for her appraisal. Uncle Joe’s opinion does not count.
- Do not use the original cost as a guideline for the current value. There is a bad rule of thumb that used clothing, furniture and household items are worth a third of original cost. If your two men’s suits that costs $3,000 total are worth a $1,000 then why are you not selling them? Salvation Army has $60 as the high range for the value of used men’s suits.
- Make sure the organization you donate to is really a qualified charity. Some for profit companies put out clothing drop boxes. Contributions to them are not deductible.
What to do
- Use a reliable valuation method such as one of those mentioned above
- Make sure your receipt is complete – Charity name, address, date, and a list of what was given. Three bags of clothes is not enough detail.
- Prepare a list before you go showing what is in each bag or box. If you can, get the charity to sign and date your itemized list indicating they received the items. The higher the value, the more important a detailed list and acknowledgement of that detailed list by the charity.
- Make sure your receipt is in hand and in acceptable form before you file your return. You can find more about the requirements for receipts from my post here.
- If the total value of similar items will exceed $5,000 for the year, get an appraisal from a qualified appraiser before you make each donation.
Conclusion
Noncash contributions provide a lot of money to charities, the charities provide shops for people to purchase affordable used items, and the charities provide local jobs at their collection centers and shops. Beyond that, a contribution of good or better quality used items reduces the waste stream by recycling the items. Just be careful valuing noncash contributions.
Do you have any tips or web sites for valuation? Please add them in the comments.