Non-Cash Charitable Donations: What You Need to Know

Our tax team does many more standard deductions these days, but some of our clients still benefit from taking an itemized deduction.

For those that do, many will provide us with a list of items that they donated to their favorite charity.

The IRS has specific rules you must follow in order to get the itemized deduction for non-cash charitable donations. So to help you out this tax season, we’ve put together a short post of things you need to give to your tax professional.

Don’t forget the name and address of the charity

This basic information is usually found on your receipts. But if not, don’t forget to include it.

If your total non-cash contributions exceed $500, we attach Form 8283 to your return. This form requires the name and address of the charity organization.

Keep a good description of the property being donated

Keep an accurate list of the things you donate. The IRS will be very suspect of vague descriptions in the event of an audit.

For example, “three garbage bags of clothing” is not a good enough description.

Instead, list each item separately. This level of detail is not required to complete Form 8283, but your personal records must clearly substantiate the deduction.

Also, keep in mind that household items that you donate must be in good used condition or better.

So if you are going to donate clothing or anything else that may be scrutinized for the donation deduction, make sure that your records can verify it meets the criteria.

Record dates, original costs, and fair market value

Your records should list the date you donated the property to the organization and the date you originally acquired the property.  

You should also include the original cost of the item (or adjusted basis) as well as the fair market value of the item.  

Goodwill has a handy calculator found here for determining the fair market value of your donation.

Verify that it’s a qualified 501(c)(3) charitable organization

Whether you donate cash or non-cash, your contribution must be given to a qualified charity to receive a deduction.

To make sure that you are donating to a charity that will qualify, search for the charity on the IRS website.

It really works quite well. Just click here and search for the exempt organizations that are eligible to receive tax-deductible contributions.

Conclusion

I hope these reminders will help you successfully substantiate your non-cash charitable donations this tax season.

And even if you plan on taking the standard deduction, we’d still like to hear from you.

What charities do you support?

Give your favorite organization a mention in the comments below.