Spring cleaning and discovering piles of used household items can help save you tax dollars. By donating used clothing, electrical appliances, jewelry, vehicles, etc. to charitable organizations, you can get substantial deductions on your return. Here are some non-cash charitable contributions that can be deducted:
Household Items & Used Clothing
Taxpayers can donate any household item, including used clothing, but only if the items are in good condition. Equally important is to donate to a qualified charity. The IRS only accepts deductions for contributions made to qualified charities. To find out if the charity you are donating to is eligible, use IRS EO Select Check. When figuring out your deductions, use the fair market value of the donated items.
Donating Pre-Owned Vehicles
When donating a pre-owned car, boat, etc. the amount of the deduction you can claim depends upon the fair market value of the item and how the charity uses the vehicle. According to the IRS, the donor may claim a deduction of the vehicle’s fair market value if:
- The charity makes a significant intervening use of the vehicle, such as using it to deliver meals on wheels.
- The charity makes a material improvement to the vehicle, i.e., make major repairs that significantly increase its value (not mere painting or cleaning).
- The charity donates or sells the vehicle to a needy individual at a significantly below-market price. In other words, this applies if the transfer furthers the charitable purpose of providing transportation to a person in need.
Here are important tax requirements to consider when deducting noncash donations:
- An item donated must be in good condition and donated to a qualified charity.
- You must Itemize deductions to claim the charitable deduction(s) on your return.
- Ask the charity for a receipt of the items donated, which must include the date, name of the charity, and the complete list of the donated items with a description. For noncash donations of more than $250, you also require documentation of whether the items were given in exchange of goods/services or not.
- Take photographs of the items donated, especially if they are of high value. Keep the receipts in your tax records to back up your claims on the return.
If the total amount of your noncash charitable contributions is more than $500, you need to file Form 8283, Noncash Charitable Contributions. Form 8283 can be filed by individuals, partnerships, and corporations. This form is filed along with your tax return for the year in which you made the contribution and claim the deduction.