Millions of Americans donate items to charity each year but many of them underestimate the value of the items they donate. Under the tax code, you can deduct the fair market value of all the items you give to charity. It’s up to you to determine a fair value, as long as you have some method to justify your valuation.
What’s more, the paperwork must be in place to support your tax deduction:
- If you donate items worth $250 or more to any charity, you’ll need a receipt.
- If the total value of goods you donate exceeds $500, you must file Form 8283 with your tax return. On this form, you have to explain how you arrived at the valuation.
- If any item or group of similar items you donate is valued at more than $5,000, you must get an appraisal from a qualified third party. Attach the signed appraisal to Form 8283.