Tax Advantage

Donating vehicles, clothing, house wares and furniture to Goodwill Industries helps us help people with disabilities and disadvantages get jobs. If you itemize, it’s also an easy way to get a tax deduction because Goodwill is an IRS-approved IRS 501(c)(3) nonprofit organization. But before you donate, there are some important things you need to know. Per IRS Publication 561, all nonprofit organizations are prohibited from assigning values to material donations. That means it’s the donor’s responsibility to determine the item’s fair market value. Here are some tips to make your tax preparation easier:

First and foremost, do your homework and always consult a tax accountant if you have questions about your claim. The fair market value of a donated shirt, for example, is far different than a used automobile. If you bought a shirt new for $40 a decade ago, then donated it to Goodwill and we resold it for $3.99, then its fair market value for tax purposes is $3.99, not $40. Classified ads from local newspapers for a similar merchandise are excellent resources to help determine fair market values, as well as simply walking through the Goodwill store with a notepad and jotting down prices.
If you believe your donation is worth more than $500, you must submit an IRS Form 8283 with your tax filing. Copies of this form are available online at http://www.irs.gov/pub/irs-pdf/f8283.pdf . Our donation center manager will sign the form to acknowledge a donation was made. His or her signature on the form is not an appraisal.
• If you believe your donation is worth more than $5,000, the IRS requires a professional appraisal, but anyone can have a professional appraisal done regardless of value. The IRS loves professional appraisals because it takes individual "best guess work" out of the process. And, for the donor, you’ll take comfort knowing the IRS won’t challenge the appraisal. The nominal cost of the appraisal may also be deductible as a miscellaneous expense. (See appraisers in the Yellow Pages.)
If the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale. (see Auto Donations)
When filling out your donation receipt, please try to include as much information as possible about the type and quantity of your donated items. Trying to claim $400 for "one bag of clothes" is a red flag to auditors.
Only taxpayers who itemize (use the long form) can deduct charitable donations. People who itemize are typically homeowners because they are allowed to deduct a portion of their mortgage interest.
You cannot deduct charitable donations using the short form--there’s no place for it.
If you don’t normally itemize but made a sizable charity donation, the donation must be greater than the standard deduction.
Save all your paperwork

More IRS guidelines for charitable contributions can be found at their web site at http://www.irs.gov/faqs/page/0,,id%3D15955,00.html
or by calling toll-free 1-800-829-1040.