Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Substantiating Noncash Charitable Contributions

Giving to charity can be very rewarding. It not only helps the community but can also provide a benefit on your tax return. Charitable contributions are reported on Schedule A as itemized deductions on your individual tax return. The following might help clarify any information needed in order to claim noncash contributions.

When asked to provide an amount for noncash contributions, oftentimes tax preparers will hear “just claim the maximum”. There seems to be a misconception about how much you can/should claim. Any noncash donation under $500 can be reported on Schedule A with no additional reporting requirements. Anything over $500 requires the filing of Form 8283 “Noncash Charitable Contributions”. There is no minimum or maximum amount for noncash contributions, so out with the old and in with the new!

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Noncash contributions are valued at the fair market value on the date of the contribution, not what was paid for the item. A couple methods used to calculate fair market value are appraisals and the thrift store value method. Most people will not get appraisals for each article of clothing donated, so the thrift store value tends to be more useful for household items and clothing. The Goodwill offers a great thrift store valuation list for donated items in their Donation Valuation Guide. Using these values for your donated property will ensure a more accurate value of your donation is being claimed.

You should keep a record of what was donated and the value for each item donated if you plan to claim a deduction. Receipts from the qualified nonprofit organization should be retained to substantiate these donations. Another good way to keep records of what was donated, in addition to the receipt, is to take pictures of any donated property. Donations in excess of $500 will require the following information in order to complete Form 8283:

  • Date of contribution
  • Date acquired
  • How the property was acquired (purchased, gifted, etc.)
  • Original cost
  • Fair market value
  • Method used to determine fair market value (appraisal, thrift store value, etc.)

Donations in excess of $5,000 may require an appraisal in order to be claimed as a deduction on your tax return. Consult your tax adviser for more information.

Henry+Horne