Property donation valuation guidelines for charitable spring cleaners

Spring officially arrived at 11:06 p.m. March 19. Have you finished your spring cleaning yet?

Me neither. But I have started.

To be honest, it was prompted when the hubby and I had some work done to our house. With the structure getting some sprucing up, it only seemed natural to replace some interior items.

The next question was what to do with the old stuff?

For many, a yard sale is a good way to get rid of unwanted but workable items. But those who don’t want to spend a Saturday haggling with strangers over the price of used items often opt to donate the goods.

If you go the donation route, which is the one the we take, you also might get a tax deduction if you itemize.

Still worthwhile for a few: That last phrase — if you itemize — is key.

Filling out a Schedule A always was one by a minority of taxpayers. Since enactment of the Tax Cuts and Jobs Act of 2017 and its increased standard deduction amounts, itemizing has dropped even more.

But a few folks each filing season do find that detailing their deductible expenses provides more than the standard amount. So they wisely use it.

Charitable giving is one area that could increase your itemized deduction claims. This includes not only cash gifts, but also donations of clothing and household goods.

The goods on donating good goods:  f course, as with any donation, you must follow the Internal Revenue Service’s rules.

The key consideration when it comes to donated clothing and household goods is the condition of the items.

The IRS specifically says in its Publication 526, Charitable Contributions, “You can’t take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better.”

This requirement was implemented to prevent people from using nonprofit groups as dumping grounds for items that literally should go to the town landfill. It seems that some less-than-charitable folks were giving away broken appliances and incredibly threadbare apparel, also known as trash, and then claiming the not-so-good goods as tax deductions.

This means that your gifts of clothing and household goods must be in a condition that someone else would want them.

Fair assessment of items’ worth: The other notable tax rule in claiming donated goods is the value of the items.

Although you’ll get a receipt for your donated goods — if you don’t, then think twice about dropping off your stuff; legitimate nonprofits provide documentation of gifts — it likely will be a blank slip. It is up to you, the donor, to determine what your donation was worth.

That’s the value of the item as is when donated, not what you paid for it when it was new. That assessment should be the item’s fair market value (FMV) at the time of the contribution.

If you’ve ever gone to flea markets, garage sales, or thrift stores and consignment shops, you’re familiar with FMV. But here’s the IRS definition to make sure:

“Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.”

If you don’t have time to do in-store research of FMV amounts at shops in your area, review the tables below to help you get what you should for your donations without prompting added IRS interest. I’ve based the amounts on the latest valuation guidelines provided by Goodwill of Waco, Texas, and the San Antonio, Texas, branch of the Salvation Army for items that are commonly dropped off at those charities’ donation facilities.

Again, these are estimates and just suggested guidelines. Use your common sense in setting a realistic FMV for your donated items.

If you grossly inflated an item’s worth, meaning your collective charitable donation claim is quite large, you’ll likely hear back from the IRS. The agency’s examiners have been around long enough to spot exaggerated donation amounts.

A few final philanthropic tax notes: Donations of clothing and household goods are subject to the same overall tax laws and IRS rules governing charitable gifts.

One of the key rules is that your donated items (goods and/or cash) must go to a qualified charity in order to be claimed as a tax deduction.

To make sure your nonprofit of choice is one of these, check out the IRS’ Tax Exempt Organization online search tool.

Several nonprofit watchdog groups also verify the legitimacy of nonprofits. Reputable charity checkers include Candid (the merged GuideStar and Foundation Center), Charity Navigator, the Better Business Bureau Wise Giving Alliance, and Charity Watch.

Also, keep good records of your donations. When it comes to clothing and household goods, you don’t have to send your donation details with your tax return. But if the IRS asks about any of your gifts, your complete and accurate records can help you prove that your donations and associated deduction are legit.

Receipts from the charities go a long way in validating your donations. Again, receipts generally don’t need to be filed with your tax return. They’re just for your use in case your gifts are questioned.

And as noted earlier in this post, if a charity refused to give or mail or email you a receipt, that’s a sign that it might not be legit.

I know this is a lot to consider if you want to claim your donations as charitable deductions. But following the giving rules as you go along makes the process much smoother, and helps ensure that you get the most tax benefit of your gifts.

And even if you don’t deduct your donations, giving useful gifts to your favorite reputable charities is a great way to feel good!

You also might find these items of interest:

• 6 tax donation deduction tips for Giving Tuesday
• 5 ways to determine whether a charity is naughty or nice
• Missing appraisals reduce donor’s charitable tax deduction

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