Putting Your Extras To Good Use

You give and you give and you give.  And the IRS wants to reward you for all of your giving.  But do you know exactly how much you can deduct for your charitable contributions of material goods? 

You know what I mean – you go through your closet during spring cleaning and decide to donate a winter coat, two pairs of boots, a couple of sweaters, pants and jeans.  And while you’re doing that, your children are also cleaning out their closets of games and stuffed animals. 

Or, you’ve just purchased new living room furniture and donate the old to a charitable organization.

How much is all that worth?  You can’t deduct the price you paid for the goods.  But, really, what is the value of all this?  This is what you can deduct.

First, you have to make sure that the items are in decent shape (no holes, rips, bad stains, etc.)  Second, you need to get a receipt from the organization to which you donated the goods.  Lastly, you will need to determine the Fair Market Value of the goods donated, as that is what you can deduct.  

There are several ways to best figure out the fair market value of goods donated:

1. Visit a local thrift shop and try to determine the value from their pricing.  Best advice:  choose the lowest price.
2. Visit the Goodwill or Salvation Army valuation websites.  Both of these sites offer easy to use tools and lists to determine the value of donated items (clothing and household appliances).
3. Visit the IRS website.  IRS Publication 561, Determining the Value of Donated Property, lays out in great detail how to best value your donated property.

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