Although it may be tempting to fudge on that blank form you’re given when you make a non cash charitable donation, your $3 sweater just isn’t worth $50 — and the IRS knows it! If you’re claiming non cash charitable deductions on your taxes this year, here’s a look at how to do it by the book.
If you’ve never been to a thrift shop or don’t know what a fair market value for an item may be, Salvation Army and Goodwill have charts showing average retail prices. If you have a rare or historically significant piece of clothing, it should be separately appraised.
If you decide to overstate your charitable deductions on your tax forms, you’ll have to prove to an auditor exactly what you donated and how much it was worth, regardless of what the receipt from the charity says.
This proof could be a photo of the items, or you could take things a step further and have the photo notarized on the day of your donation, then affix the receipt from the charity.
No matter what you’re donating or how much it’s worth, you need a receipt. If you’re donating items worth more than $250, you need a detailed receipt that describes each item. If you’re donating something worth more than $500, you’ll need to fill out an 8283 form, and if you’re claiming high-end items such as jewelry or art, an independent appraisal is required.
The rules regarding non cash donations are very complicated and this article only scratches the surface. Please feel free to contact the office if further information is required.
Written by: Doug Rodrigues