This week we will discuss non-cash contributions. Non-cash items are furniture, clothing, home appliances, sporting goods, artwork and any item you contribute other than cash, money, or checks. Most taxpayers donate far more dollar value than they realize, but they seldom keep track of it. This type of deduction could save you hundreds or thousands of dollars each year, but you must document your contributions. Keeping good records is what will always win, in case of an audit.
Generally, you can deduct your cash contributions and the fair market value (FMV) of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars, and boats. If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the FMV of the benefit received. FMV is generally the price you would get if you sold the property on the open market. Usually the receipt you receive for the donation will state how much that is.
To claim a deduction for donated property of $250 or more, you must have a written statement or receipt from the organization. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the gift.
If you donate property, the receipt that you are given must include a description of the items and a good faith estimate of its value. For items valued at $500 or more of total non-cash items (food, clothes, electronics, computers, household goods, furniture, etc) you must complete Form 8283, Non-Cash Charitable Contributions. Be sure to take pictures of items donated to both prove what was given and the condition of donated the items.
If you claim a deduction for a contribution of non-cash property worth more than $5,000, for any one item, generally an appraisal must be obtained, and Section B of Form 8283 must be completed and filed with your return. And for items valued greater than $5,000 you must attach a copy of the written appraisal along with the Federal tax return. If you file electronically, you will attach a PDF of the appraisal to the Federal tax return, otherwise you send in a written copy of the appraisal when filing a paper Federal tax return.
When donating Non-Cash items (clothes, furniture, household items, artwork, etc.), taking pictures of items donated helps show the condition of the items. This way you can better prove your valuation amount used.
The Salvation Army has a web site that is used to value items that are given to non-profitable organizations, by simply going to the website www.salvationarmyusa.org, and typing in the word “valuation” in the search bar. You will see different items that are given away and the valuation that has been accepted by the IRS for charitable donation purposes, based on the condition of the item.
Additionally, our office has a Non-Cash charity contribution checklist that is available free to the public that can be used in preparing your tax returns. If anyone wants a copy of this, simply contact our office.
Here are some points to remember:
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