IRS Tax Guidelines for Donated Items
- The IRS allows a deduction for the donation of non-cash items to qualified charitable organizations. The deduction is available to any taxpayer who itemizes deductions and files a Schedule A, Itemized Deductions, on Form 1040, U.S. Individual Income Tax Return. The deduction amount is limited by income, though deductions disallowed as a result of income may be carried forward to future tax years. In addition, itemized deduction totals are often limited for upper-income taxpayers.
- IRS guidelines depend on a donated item's value or--more precisely--the claimed value of the donated item or items. Taxpayers sometimes avoid the complicated documentation rules involved in the donation of higher-value items by reporting a lower value. The IRS guidelines depend on whether the non-cash items total less than $250; $250 to $500; more than $500, but not more than $5,000; or more than $5,000.
- For non-cash contributions of less than $250, taxpayers must obtain receipts from the charitable organization listing the organization's name and location, the date and a reasonable description donated items. In addition, the donor is required to keep a written record including a further description, the fair market value, the cost or basis of the items, and any terms of the gift.
- Documentation requirements are the same for non-cash donations that range in value from $250 to $500. However, the IRS expands the scope of the information that must be included on the receipt from the charitable organization and requires the taxpayer to obtain the receipt prior to filing his return. Donations valued from $500 to $5,000 have the same requirements but require the taxpayer to document how and when the item was acquired. For gifts over $5,000 a qualified appraisal is mandated.
- IRS guidelines mandate that a taxpayer with total non-cash charitable contributions of $500 or more file Form 8283, Noncash Charitable Contributions, with his individual income tax return. The IRS rules for non-cash charitable contributions are complicated, and the IRS has additional detailed guidelines for the donation of many items: equity stock, partial interest property, business inventory, automobiles, boats, airplanes, property subject to debt, and household goods.
