Non-cash charitable contributions. You gave your clothes to charity.

January, 24 2014 by Carol Thompson, EA

You cleaned out your closets, attic and garage this year and took all of those piles down to your local charity drop-off location. (I bet that felt good.) But, get the paperwork right before tax time. Most audited taxpayers lose some or all non-cash contributions due to poor recordkeeping. So what do you need to do for your taxes?

1. Make a List.  Before you take the clothes and household items to a charity, lay everything out on the bed, the floor, or another clean surface. Organize – put the slacks, blouses, shoes, sweats, and other items in separate piles. Take pictures. While you bag everything, make a list of what goes in each bag or box. (“4 pairs of men’s dress pants, 3 women’s blouses, 5 sweatshirts, etc.”). The list does not have to detail the color of each shirt, but it does need to categorize the items by value.


2. Use a worksheet to value the items. You can find donation values online at:
   
   
   • http://satruck.org/donation-value-guide (Salvation Army);
   • http://www.goodwill.org/get-involved/donate/taxes-and-your-donation/ (Goodwill);
   • http://www.nolo.com/legal-encyclopedia/how-value-noncash-charitable-contributions.html (Nolo Press “How to Value Noncash Charitable Contributions”); or
   • https://turbotax.intuit.com/personal-taxes/itsdeductible/ by Intuit (will transfer directly into a Turbo Tax return).  Some of these, like “Its Deductible,” can be accessed from a mobile app on your smart phone.


3. There is a catch. If your non-cash deductions are more than $500, you must fill out Form 8283, Donee Information Return, and attach it to your return; and, if the aggregate of any one “item” is more than $5,000, you will need an appraisal by a qualified appraiser. (This does not include money or publicly traded securities. The IRS does not consider recipient non-profits as qualified appraisers.) If you give away all of your clothing in one year, and it adds up to more than $5,000, you will need an appraisal for all of the individual contributions.


4. Value over $500. Whenever you donate more than $500 of goods during the year, attach copies of the value lists, appraisals (if needed) and photos of the donated items.


5. Value over $5,000. A filled in and signed Form 8283, page 2, should be given to you by the recipient organization with the appraised value filled in and a copy of the appraisal. Copies of the forms should be attached to your tax return.

It’s a great feeling to help others – but take the time to do it right, and receive a financial reward as well.  Happy cleaning!