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How do I determine the value of my donation?
For cash, this is easy. But for those property donations where a receipt or written statement did not reflect the amount or value, there are several ways to assign the fair market value.
First, the IRS Publication 561 Determining the Value of Donated Property provides some general information about household items and clothing, and provides more specific information on cars, boats, airplanes, jewelry, art, real estate, patents, etc.
Second, and more practically, there are several online sources to help you piece together the value of your college freshman’s unneeded high school clothes.
Intuit / TurboTax created a site called ItsDeductible (http://turbotax.intuit.com/personal-taxes/itsdeductible). Much to our chagrin, TurboTax did a wonderful job with the creation of this online tool. Good stuff.
Goodwill Industries has a Donation Valuation Guide which illustrates general pricing for the items they sell in their stores.
Salvation Army also lists several items and their associated value (http://satruck.org/donation-value-guide).
Remember, since 2007 the IRS, as directed by Congress, now requires that household items and clothing be in good used condition or better. What the heck does that mean? It’s subjective for sure.
eBay / craigslist can also be a good resource to show the fair market value of items that perhaps aren’t easily valued. For example, if you donate a washing machine you demonstrate or prove the fair market value by finding one or two listings of the same item on eBay or craigslist. While these sites aren’t listed as authoritative by the IRS per se, they do offer a sound basis for fair market values in our opinion.
Another suggestion is take pictures as proof or evidence of the quantity and condition of the items donated. If you are donating a bag of clothes, this is perhaps unnecessary. But if you are donating more expensive items such as appliances, books, furniture, etc., pictures might tell a thousand words. This can also prove invaluable for large estate donations as well.
Quid Pro Quo: If you donate something in exchange for goods or services this is known as a quid pro quo contribution. For example, you donate $100 to a charity and they give you voucher to a movie worth $40 (which the theatre donated and deducted as well). Your deduction is limited to $60 but the since your donation exceeds $75, the organization is required to furnish a disclosure statement. This statement must inform you that the deduction is limited to the difference between the contributed goods or services and a good-faith estimate of the fair market value of the goods or services.