It is important to keep accurate documentation of your donations so you will know the approximate value of each item you gave to charitable organizations. But sometimes, knowing how to value a donated item is hard. Fortunately, there are lots of guides and programs to help you do it right.
Valuation Guide for Donated Items
|Man's or Woman's Shirt||$ 2.50 - $12|
|Woman's Sweater||$ 3.75 - $15|
|Children's Clothing||$ 3 - $12|
|Man's Suit||$ 15 - $60|
|Woman's Evening Dress||$ 10 - $60|
|Kitchen Table Set||$ 35 - $170|
|Sofa||$ 35 - $200|
|Desk||$ 25 - $140|
|Floor Lamp||$ 6 - $50|
It's important to remember that the value of the donated item is not equal to how much money you originally spent on it. Instead, the item is valued at how much it is worth when it is donated. In other words, if you originally spent $40 on a sweater, it may only be worth $5 after it has been used. Be careful of overvaluing your items, as it is a red flag for the IRS.
Other Ways Value Your Donated Items
If you are uncomfortable assigning a value to your donated items, don't worry. There are lots of resources to help you figure out how best to value your donations.
It's Deductible is provided by the good folks at Intuit of TurboTax fame. It is a program that allows you to keep a running total of all your donations as you give them and automatically provides a value based on a database of several thousand goods and current blue book estimates. What's especially nice is that if you use TurboTax to prepare your taxes, you'll find that you can simply import the information onto your tax form. Even if you don't use TurboTax, the information is well-organized and easy to use come tax time.
Other Valuation Guides
Often when you donate items to a charity, they will give you a receipt and leave it blank so that you can fill in the amount you think the items are worth. Therefore, the following places provide valuation guides to help you figure out what the fair market value of your donated item really is:
- Salvation Army Valuation Guide - A long list of the most commonly donated items including clothing, appliances and household items.
- Goodwill Industries - Goodwill provides a downloadable guide that covers everything that you could conceivably donate to Goodwill.
Many third party tax preparers such as H&R Block use these two guides to help their clients value donated items.
IRS Regulations on Donation Values
The Internal Revenue Service has strict guidelines with regards to estimating value for charitable donations. Keep in mind the limits set for deductions before estimating the value of items you donate, because while some donations do not require additional IRS forms when requesting a deduction, some amounts will certainly result in extra paperwork.
- Amounts of $250 require documentation from the charitable organization.
- An IRS Form 8283, Section A is required for charitable donations exceeding $500 that are noncash donations.
- An IRS Form 8283, Section B is required for charitable donations exceeding $5000 that are noncash donations.
High-Priced Donated Items
The IRS has special regulations for estimating the value of high-priced items that are donated to charity. For example, objects of art that are valued at less than $5000 require a written appraisal from a qualified professional. Art objects valued over $20,000 must have an appraisal as well as a photograph and detailed description of the object attached to the tax return. Art objects valued over $50,000 require an entirely different process involving requesting a Statement of Value from the IRS (which involves a fee of $2500 for the request) and the art might wind up being examined by an IRS official before the tax deduction is allowed.
Cash donations generally are much easier to value since the amount you donate is the value of the donation. Stocks, annuities, life insurance and patents are a little more difficult to estimate with regards to the value, but the IRS has regulations in place explaining the value estimation process for donations such as these as well.
Seek Professional Advice
It is a good idea to consult a tax professional if you are planning on making a sizable donation to a charity. A professional can make sure that you are in compliance with tax guidelines and requirements and will be able assist you with receiving a credit for your donation.