Just a few days ago, I told you how we dumped 132 items of clothing off with Goodwill. Commenter CPAMike asked how we came about our valuation of $707. I actually used a few sources, but mostly Goodwill’s site (not sure which one now). He pointed out a few links, but it appears that every Goodwill and Salvation Army seems to have its own set of valuations for donation items. For example:
Even Bankrate is in on the fun! But which one do you use? Well, they’re all pretty close in their valuations, so I recommend staying in the middle-ground to be safe. However, if the piece of clothing is really top quality, well, maybe you should try selling it on eBay!
If you want to know what the IRS says, check out these links:
- Publication 526: This is big publication, with a table of contents, that talks all about charitable contributions. Read it, learn it, love it, take it out for dinner, but don’t try to deduct the meal!
- Publication 561 (PDF): This is the bible for “Determining the Value of Donated Property”. It doesn’t give you specific values, but it tells you how not to screw up your values and what the IRS expects when you file your taxes.If you’re donating any single piece of clothing valued over $500, IRS wants an official appraisal report sent with your return. Look at pages 4 and 9 for specifics about clothing.
- Tax Topic 506: This is a short-form, plain English explanation of contributions from an IRS perspective. Take note of the following statement:
You must fill out Form 8283 (PDF) Section A, if your total deduction for all noncash contributions is more than $500. If you make a contribution of noncash property worth more than $5,000, generally an appraisal must be done. In that case, you must also fill out Form 8283 Section B
Looks like we’ll be filling out Section A of Form 8263 this year since our donation is valued over $500. I’ll let the tax software take care of filling out the blanks. I trust the machines now, even though I’ve seen what they’ll do to us in Terminator. Heck, didn’t anyone notice they’re already taking over our government? That California governor looks very familiar.
Anyway, take care in valuing your donations and pay attention to tax law. Oh, and take pictures of everything as proof and catalog all of your donations in a nice spreadsheet. And lastly, make sure you get a signed receipt from the charitable agency.
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