It’s tax preparation season, the time of year when you get rewarded for all of your efforts of having a yard sale and then donating the leftover items to charity. You diligently got your donation receipt and filed it away with a detailed list of what you donated. Good job!
Now you have one very important last step. You need to determine how much you can deduct on your taxes for everything you donated. IRS Publication 526 “Charitable Contributions” explains how to claim a deduction for charitable contributions. And IRS Publication 561 “Determining the value of donated property” says you may deduct the Fair Market Value of the item.
How do you determine Fair Market Value?
Fair Market Value (FMV) is defined as “the price that property would sell for on the open market.” So, how do you determine the price someone would pay for the sweater your Aunt Martha gave you for Christmas five years ago? Fortunately, there are several free sites that will help you on this pricing journey.
The Salvation Army Donation Value Guide – This is the official Salvation Army pricing. Limited in scope, but excellent at giving you an idea of what items go for at their stores. For each item, they list a low and high amount.
Valuation Guide for Goodwill Donors – Also limited in scope, but teaches you that a sweater is a sweater. It doesn’t matter how expensive it was at the retail store. Now they are all priced almost the same. This is the reason why you can snag great deals on designer clothing at Goodwill stores. For each item, there is a price range divided by whether the item is for women, men, or kids.
Turbo Tax ItsDeductible – This is a fabulous, free online resource. You can input your donations as the year goes on and the system tracks all your donated items and the current total donation value. The only drawback to this application is that you can’t print out a detailed report of all the items unless you buy the rest of their software and use their online e-filing. But you don’t have to upgrade to get a lot of use out of ItsDeductible. Note: A reader reported that ItsDeductible inflated the value of donations, resulting in penalties from the IRS. So use with caution!
Charity Deductions – This website has valuations for thousands of items and provides printable reports for your records and accountant for less than $15/ tax year. It works for anyone with an internet connection and has a money back guarantee. Plus, you can start a FREE trial before committing to pay!
None of these lists will have suggested FMV prices for everything you donated. However, by studying the FMV of items that are on the lists, you will get an idea of how much to deduct for comparable items that you’ve given to charity. I guarantee if you make a detailed value list of all your donated items, you will be nicely surprised at the total amount you can claim.
If you have any other ways to determine Fair Market Value, please share them!
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Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
The National Council of Jewish Women in Los Angeles will give you a receipt for the value of donate goods. This receipt can be used when filing your taxes. I took a couple of boxes of clothing and received a receipt for $1050, what a happy shock.
@ Carol Wow! That’s great to know that the National Council of Jewish Women in LA gives a receipt with value of goods. Very valuable. I’ll see about taking my next donations to them.
I am an Enrolled Agent (a license issued by the Department of the Treasury to prepare tax returns in all 50 states) and have most of my clients now taking clothes, shoes, furniture, books, etc to The National Council of Jewish Women locations through out the Los Angeles area. It’s better when the charity values the goods as opposed to you valuing the goods yourself.
@Bobbi Wax I was under the impression most charities will not do the valuation themselves. Lack of time and resources, I imagine. Does the National Council of Jewish Woman provide an itemized receipt with donation values to donors?
One thing that Bobbi didn’t mention is that you have to itemize your deductions in order to write off the charitable contributions. If your total deductions for medical expenses (subject to 10% of AGI if you are under 65 or 7.5% if you are 65 or older), taxes paid to the state (income or sales), personal property taxes, mortgage interest and property taxes, charitable contributions, and unreimbursed employee business expenses (subject to 2% of AGI) is less than the standard deduction which is $6300 for a single person or married filing separately, $9,250 for head of household or $12,600 for married filing jointly, then you won’t get to write off the charitable contribution. The standard deductions are even higher for people over 65 and/or blind.
Giving is wonderful and don’t stop donating, but unless you are able to itemize your deductions, you won’t get the additional write-off.
Myke Sobel, RTRP
(Registered Tax Return Preparer)
Thanks for your expert advice, Myke!
I am informed by the IRS that It’s Deductible is not a valid value guide. They sent me a letter stating my non-cash donations were overvalued. I used Turbo Tax and It’s Deductible program to estimate everything. I even used the “low” value on many clothing items. It’s deductible stated I had $3,900 in donations, the IRS said the value was only $2,000. This is a significant difference. BEWARE! I just learned the hard way. You cannot use It’s Deductible apparently. The IRS will reject it & you will end up owing them money plus interest!
That’s good to know, although I’m sorry you had to learn the hard way. I made a note in the post about your experience.
I’m currently using It’s Deductible to value donation items and found they were putting much higher valuations on my items than what the Goodwill web site does. So I tend to agree with that they are over-valuing. That’s why I did a Google search and came upon this site. I’m going to play it safe and use the Goodwill value
I never used It’s Deductible, by TTAX, but I did learn a little trick to get the actual value of my donations. I typically donate to Goodwill, simply because there are three of them near me. So, after I donate my items I wait 48 hours and go back to just one of the stores…usually the one closest. I peruse the store and check to see what items I donated made it to the racks and shelves. I use my phone’s camera and photograph various items’ with the price tag, along with other similar items. It is not hard to get a reasonable sense of the pricing scheme. Those prices are what you can claim, so long as your items match the condition of the comparable items. It takes me a whole 20 minutes! By the way…keep those pictures to take to an audit, if you are ever audited. It is hard to argue physical proof and reasonable logic!
That’s a great tip! Thanks for sharing!
I give absolute wonderful clothing items and home decor, yearly (beautiful children’s clothes & shoes, also).
The thrift store simply gives a receipt with no amount posted and tell me to write what I have given. No one is going 2 value my gifts as I do. So, what do I say come tax time?
I find it easier to donate to a charity that will put the value in the tax doc for you or at least give you a little guidance on how to get an idea of what value to place. I’ve read good things about With Causes, so maybe you can use a combo of the turbo tax website & get a little direction from them. A ll their forms are digital which make sit tons easier to fill out since you can submit it quickly. Link to the website is https://www.withcauses.org/
NCJW has stopped providing valuation receipts, leaving donors open to the IRS questioning their deductions. I know most accountants sent their clients there to donate because even if their valuations were low (which they were), they would not be questioned by the IRS. Now I am going to give clothing directly to shelters and other items to charities that may more directly fit my giving profile rather than open myself to a problem later with the IRS
Interesting guide and ideas that everyone can follow through for their tax ideas needs.
Great guide that everyone can easily follow.