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?
- 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.
- Use a worksheet to value the items. You can find donation values online at:
- 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.
- 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.
- 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!