A Guide to Valuing Donated Goods
November 7, 2017 by Amy Johnson, CPA
During tax season, we are regularly asked about deducting the donations made during the year to specific organizations. A donation consists of anything from clothing and shoes, to kitchen appliances and furniture, all the way to cars or boats. Whatever the object may be, it is more than likely deductible on your federal and state tax returns for the fair market value of the object(s), just as if it were a cash donation.
As a guide, use the chart below to help you decide the value of your donated goods and to keep a record of your donations for income tax purposes. You can download this chart as an excel worksheet. Complete this worksheet and bring it with you to your next appointment with your certified public accountant (CPA).
Additional factors to consider in valuing your donated goods are the condition, style, and usability of the item.
However, determining the value of the donated items is the responsibility of the taxpayer, not the organization to which you donated. One way to accomplish it is by using what is often called the “thrift-shop” method.
Regardless of the value used, the Internal Revenue Service (IRS) or your state can contest the deduction if you do not maintain enough evidence to support your valuation.
The list above shows the average prices of items in a Salvation Army or other thrift store, provided the items are in good condition. New or expensive items would be valued higher and damaged materials lower. This list is for your guidance only. There are additional variables such as condition, age, antique value, cleanliness, repair needed, and value when new.
According to federal income tax regulations, donors claiming deductions for charitable contributions consisting of property other than cash worth more than $500 must file IRS Form 8283, “Noncash Charitable Contributions.” Where the noncash charitable contribution (other than publicly traded securities) exceeds $5,000 (including “similar property” contributed to one or more charitable organizations), the charitable organization(s) must acknowledge the contribution on Form 8283. We have prepared a document outlining the substantiation requirements in detail. Download our Charitable Contributions: Donor Substantiation Requirements resource.
If you would like to learn more about valuing your donated goods or substantiation requirements, contact us or call our office today to set up an appointment, 248.952.0200.