As the year comes to a close, it is a good idea to review what is required to support a deduction for noncash charitable contributions that you may have made during the year or plan to give in the next few weeks.
Here are a few key points:
- When a noncash donation exceeds $250 or more in value, you are required to get written acknowledgement from the receiving organization. The receipt must provide the date and describe what was donated. It must also verify that no goods or services were exchanged for the donation or describe in value what the charity gave in return. You must attain this documentation by the time that the tax return for the year of donation is filed or due, whichever comes first.
- When noncash donations of the same or similar items (such as clothing, jewelry, furniture, electronics, etc.) exceed $500, you must retain documentation that identifies the following –
- The date that each noncash item was acquired
- A reasonable description of the property with its condition
- An estimate of the purchase price
- The current retail value (for a second-hand or thrift-store)
- An explanation of how this value was determined
There are on-line tools for making these calculations including the Salvation Army’s donation guide and Goodwill’s Valuation Guide for Goodwill Donors.
- When noncash items (not including publicly traded securities) collectively exceed$5,000 for the same or similar items, you are required to have them appraised by a qualified appraiser.
The IRS and the Tax Courts take the charitable donation documentation rules very seriously. If you want to claim a noncash contribution on your tax return and feel confident it will hold up if questioned, you need to make sure you have the required information in good form. For additional support, maintaining photos of donated items is also suggested.
If you have questions about documenting your noncash contributions, please contact your Kerkering Barberio tax professional at 941-365-4617.