Determining the Value of Your Non-Cash Charitable Deductions

Donating gently worn clothes and old household items is not only good for the environment, it can also benefit your favorite charity and save you money at tax time.

Things like old clothes, furnishings, and old toys are just a few examples of "non cash" charitable donations. As long as these items are donated to a charitable non-profit with a 501(c)(3) designation, you will be entitled to the deduction.

Over the years, our family has donated all sorts of used items to charity and claimed the the charitable deduction. We've learned from experience that there are a few rules to follow when donating old clothes and household goods for a tax deduction. These rules are as follows:

-- The item must be in good or gently used condition. Broken items, worn out or heavily soiled items aren't eligible for the deduction.
-- Items donated must be claimed in the year they were donated.
-- If the value of the donation is $500, you will be required to file a Form 8232 which asks for a full itemization of the donated items.
-- If the items donated are worth more than $5,000, an qualified appraisal may be necessary.

One point worth noting here, is that these limits apply to an entire year's worth of donations. If for example, you donate $100 worth of stuff to the Salvation Army every month, at the end of the year the total value will be $1200 which means Form 8232 will be required. Since Form 8232 calls for an itemization of all donated items, it's a good habit to itemize your donations throughout the year instead of waiting until tax time.

To track those non cash charitable contributions throughout the year, one easy system is to record the donations in a small notebook. Each set of donations should start with a clean page which is then recorded with the following information:

--The date of the donation
--The item being donated, for example, a box of hardcover books or 20 teen girl sweaters.
--The value of each donated item. These values are determined by thrift store values OR by referring to a Donation Value guide. The best ones I've found are issued by Goodwill and Salvation Army. They can be accessed at Goodwill.org or Salvationarmyusa.org.
--Once the item/s have been donated, paper clip the printed receipt to the itemized list.

This simple method is how I track my non cash charitable donations throughout the year. While it does take a little bit of extra work, it will keep your receipts and donations organized and easy to find at tax time.

More from this contributor:
How decluttering may save you money at tax time
Do I have to file taxes?
Home Office Deductions for the Self Employed