A report by the Treasury inspector general for tax administration estimated that 60% of taxpayers who make noncash contributions aren't complying with reporting requirements, and it urged the IRS to step up scrutiny of these deductions. The report was particularly critical of donated vehicles, but it also mentioned donations of property, clothing and art.
QUIZ: Is It Tax Deductible?
When you donate noncash items to charity, the IRS expects you to use the fair market value in determining the deduction. You must provide a written description of noncash items valued at more than $500 on Form 8283. An appraisal is required for items valued at more than $5,000.
You can use eBay and other resale outlets to estimate the fair market value of your donations. The Salvation Army provides a helpful guide, and tax software such as TurboTax''s ItsDeductible also offers guidance. Keep in mind that clothes and other household items must be in good condition to be deductible. Take a photo of your donated items in case the IRS challenges your valuation, suggests Bob Meighan, lead CPA at the American Tax & Financial Center at TurboTax. "That's one of the best forms of evidence you can have" to show the item's condition when you donated it, he says.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
