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Accounting Tips for Non-Cash Charitable Donations

written by: Kaye Morris•edited by: Jean Scheid•updated: 8/29/2010

Charitable contributions are an allowed itemized deduction for your federal tax return that can help reduce your tax liability. In the event of an audit, you need to provide a proper accounting for a non-cash charitable donation, otherwise, the IRS may disallow the deduction.

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    Make a Detailed List

    Sample Donation Schedule If you donate cash to a qualified organization, accounting for the donation is as simple as providing a receipt, canceled check or proof of a bank account or credit card debit for the donation. If you make a non-cash charitable donation, accounting for the donation becomes more complicated based on two things: the amount of items donated and the value of the items donated.

    Many people donate property when moving or during a spring house-cleaning because they have working items in good condition they no longer use and don’t want to throw away. Organizations like Goodwill and the Salvation Army usually provide drop-off locations where you can easily bring your bags and boxes of donations in exchange for a receipt. The receipt will provide, at most, the organization, the date of the donation, the donation location, and the number of boxes or bags donated. It is up to you to make a proper accounting for the items prior to packaging them for delivery.

    For ordinary household items, the list only needs to identify the donation by general type, such as 10 pairs of pants. You do not have to specify the color, the style or the designer. So separate your items by type, then make a list as you’re bagging the items.

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    Assign a Value

    The IRS allows you to deduct the “fair market value" of a non-cash charitable donation. The fair market value of an item is the price you would expect to get if you sold the item on the free market. A good method for valuing household items and clothing is to use thrift store prices. The fair market value of used household items and basic clothing will always be considerably lower than the price you paid for the items. Choose a basic value for each general type in order to derive a total donation amount. For example, you might assign a value of $2 to each pair of donated pants. If you donated 10 pair of pants, then your total deduction is $20 for the pants.

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    Valuation of High-End Items

    If you donate designer clothing, such as furs or high-dollar gowns, jewelry, paintings, antiques, or other art items for which the fair market value is higher than $500, you should obtain a qualified appraisal in order to obtain the deductible value of the property. A qualified appraisal should be performed by a person who specializes in the business of collecting, selling or appraising the donated object. To determine the value of high-end objects such as a car, use industry pricing guides. In order to avoid follow-up questions, you should always submit a copy of the appraisal with your tax return.

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    References and Image Credits


    Internal Revenue Service: Publication 561

    Internal Revenue Service: Schedule A Instructions

    Image by Kaye Morris